Port Louis — Structured organizations periodically revise salaries and perks, depending on productivity, industrial relations climate, and in keeping with industry practices. Demand for salary increase arises on account of inflation eroding the value of money, and also because employees perceive that the industry can afford to pay a little more as the general tendency is to constantly improve the standard of livings.

While most organisations conduct such an exercise periodically, resulting in incremental growth in salaries, some companies may not be able to do this so frequently, thus taking a considerable amount of time between revisions.

Slow moving organizations end up with mediocre personnel, who stay loyal not because they choose to, but because they lack necessary skills and competence to fit in anywhere else. Such mediocre staff is bound to diminish growth potential.

On the other hand, there are companies, which beat their peer companies in salary hikes and perks. These revisions result in not merely incremental growth but in manifold increases.

It is generally believed and accepted that any increase in remuneration would necessarily pay off in terms of increased performance and commitment due to motivation. Though salary in itself cannot be considered a motivating factor, any increase is bound to have at least a temporary feel-good effect. Incremental revisions, on the other hand, more or less match expectations and consequently do not have any significant effect on employees' morale, but their absence may cause demotivation and frustration.

When organizations go in for quantum increases in salaries and perks through structural revisions, it has far-reaching consequences and, if not carefully analysed, the organization might actually end up with personnel-related problems.

Most organizations periodically hike salaries through incremental salary revisions. However, a mistake some chief executives usually make whenever there is conspicuous progress in a company's performance is to consider it fit to revise salaries and other benefits beyond all expectations, breaking away from the slow, steady hike traditions, and to simultaneously revise designations and introduce American corporate style fancy designations like assistant executive, assistant vice president, etc.

At first, employees will be quite happy as they get manifold increases in their salaries, coupled with designation changes. But this euphoria is usually short-lived, as they soon realize they are doing the same old kind of work that they used to do before they got their hikes and fancy designations.

Such employees will start losing interest in their work, and productivity may be greatly affected. Some of them may even decide to leave the company and seek better opportunities elsewhere. Thus what was envisaged as a great motivational effort in revising the emoluments had a completely negative impact.

A salary revision, which does not match psychological expectations of greater responsibility, often results in employees leaving an organization. This can be averted, if the increase in emoluments is given not as a matter of routine revision, but as a higher managerial compensation for assuming increased accountability and/or responsibility. In this regard, a systematic HR policy should be worked out to clearly disseminate a message that the organization is contemplating a major structural revision consequent to which designations, job descriptions and account ability levels would be enhanced.

It should also be made clear that it would only be as a part of the restructuring exercise that emoluments would be raised to compensate employees for their increased responsibilities.