The document outlines 'Karma,' a new appraisal system at Digicorp aimed at aligning employee raises with company performance while minimizing stress and promoting transparency. The system calculates raises based on a combination of profitability, employee experience, and role, distributing 80% of profits for raises, reserving 10% for top performers, and ensuring company sustainability. Additionally, it eliminates annual performance reviews and introduces quarterly bonuses, emphasizing the necessity of quality work and real-time feedback for successful implementation.

1. Karma
A leap forward

2. What is Karma?
Wikipedia:
Karma in Indian religions is the concept of
"action" or "deed", understood as that which
causes the entire cycle of cause and effect
Digicorp:
An ingenious appraisal system

3. Why?
An ideal appraisal system should be tightly linked to
company’s performance
It should not be too much dependant on the projects
you worked on in last one year (or last couple of
months!). Especially for the service company like
ours.
Better negotiators should not get better deal
The month of appraisal should not be the most
stressful time of the year for everybody
An unsatisfied soul should not wait for a year to get
next increment

4. Digicorp’s Goals
To become the best place
to work
To become the best, you
have to be transparent and
honest
Profit!
Best
Working
Conditions
Best
Software
Best
People
People should stop
thinking about their
salaries and focus on work
Do the job for the love of it
and not for the money
Karma is one significant
leap in this direction

5. Karma
So how does it work?

6. Assumptions
You have performed well
You have performed very well
People are inherently good

7. Step 1
Calculate average year on year profit per month
of Digicorp for last 7 years
Take the maximum profit number (ideally we
should consider last year’s profit but since it was
less we took the max figure)
Let’s call it PROFITX per month

8. Step 2
80% of PROFITX will be distributed in giving
raise
10% of PROFITX is reserved for people who
have performed very well
10% of PROFITX is reserved for company
NOTE: Only 10% reserve is not ideal to maintain
a strong company so it will be increased in
future. It should be around 30% or 40% but that’s
for later.

9. Step 3
Define parameters for calculating distribution
Total experience in years
Experience in years with Digicorp
Current salary
Role
Review Months

10. Step 4
Define weightage and
weighted average of
the parameters
Remember Fibonacci
Series!
This is defined as per
market research and
priorities of company
It may change as and
when required
Parameters
Bucket
A
B
C
D
E
F
Start
10000
15001
20001
30001
50001
80001
End
Weightage
32
15000 13
20000 8
30000 5
50000 3
80000 2
130000 1
Role
Manager
Programmer
Designer
QA
BA
System Admin
Admin
Weighted Avg.
0.41
0.25
0.16
0.09
0.06
0.03
5.80
1
1
1
0.8
1
0.5
0.5
0.17
0.17
0.17
0.14
0.17
0.09
0.09
Years of Experience
A
B
C
D
E
0
1
2
3
5
0.99
1.99
2.99
4.99
7.99
12
1
1
2
3
5
0.08
0.08
0.17
0.25
0.42
Years @DIGICORP
A
B
C
D
E
0
1
2
3
5
0.99
1.99
2.99
4.99
7.99
12
1
1
2
3
5
0.08
0.08
0.17
0.25
0.42

11. Step 5
Define weightage of each parameter as a whole
for e.g.
Total Experience : W
Exp at Digicorp: X
Role: Y
Current Salary: Z
W + X + Y + Z = 1 (i.e. 100%)
Again the weightage of each parameter is
defined as per priorities of company and may
change as and when required

12. Step 6
Karma (Score) = ( Total Experience Weighted Average * W
+
Exp at Digicorp Weighted Average * X
+
Role Weighted Average * Y
+
Current Salary Bucket Weighted Average * Z )
*
Review Months

13. Step 7
Calculate Raise /month
=
(Karma / Total Karma) *
PROFITX

14. Example
Name: James Bond
Total experience in years – 5
Bucket (5 – 8): 0.42
Experience with Digicorp – 3
Bucket (3 – 5): 0.25
Current salary – 35000
Bucket (30k – 50k): 0.09
Role – Programmer
Weightage: 0.17
Review Months – 12
Karma: (0.42 * 0.20 + 0.25 *
0.31 + 0.09 * 0.29 + 0.17 * 0.20
) * 12
= 2.6592
Raise: (2.6592 / 150) * 475000
(PROFITX)
= 8420
Parameters
Bucket
A
B
C
D
E
F
Start
10000
15001
20001
30001
50001
80001
End
Weightage
32
15000 13
20000 8
30000 5
50000 3
80000 2
130000 1
Role
Manager
Programmer
Designer
QA
BA
System Admin
Admin
Weighted Avg.
Param Weight
1.00
Param Weight Avg.
0.29
0.70
0.20
0.70
0.20
1.10
0.31
0.41
0.25
0.16
0.09
0.06
0.03
5.80
1
1
1
0.8
1
0.5
0.5
0.17
0.17
0.17
0.14
0.17
0.09
0.09
Years of Experience
A
B
C
D
E
0
1
2
3
5
0.99
1.99
2.99
4.99
7.99
12
1
1
2
3
5
0.08
0.08
0.17
0.25
0.42
Years @DIGICORP
A
B
C
D
E
0
1
2
3
5
0.99
1.99
2.99
4.99
7.99
12
1
1
2
3
5
0.08
0.08
0.17
0.25
0.42

15. Are we becoming socialist?
We hope not. 10% is reserved for people who
have performed really well.
This time we have identified such people with the
help of their leaders, in future we may just vote.
The percentage may also change in future
The distribution of this amount will be done using
the same logic with same or different parameters

16. Wait it’s not over…
So we have abolished the annual face to face
meetings, drudgery, despair, negotiations etc., but
there is more to it…
Every quarter you will be given bonus using the same
logic on the profit company has made during 3
months
Yes, bonus on top of your current raise every quarter
The parameters and values may change
Your base salary will increase only once in October
We don’t want to go bankrupt after all!

17. Still it’s not over…
Alright the money part is set now, let’s talk about the
other side of the coin i.e. Quality and Time
“Karma” can only succeed if we keep giving quality
work in time to our clients every day
How do we measure quality of work and improve
from here?
We can’t afford to have people for whom quality and
timely delivery is not a priority
How do we find and improve such people?

18. Pratikriya (
)
A real-time feedback system
“Don’t talk about what you did wrong?”, instead
ask “What can you do differently going forward?”
This will be the basis of the system to be
defined…
We will have to take some tough calls as well in
this week for few people, who we think can do
better in some other organization

19. It is just a start!
This idea is radical as far as we know and it is
not perfect yet
We, directors have not taken any raise this time
We may refine it multiple times before we
achieve nirvana!

20. Justifying “Karma”
Karma in Indian religions is the concept of "action" or "deed", understood as
that which causes the entire cycle of cause and effect
More Raise
Better
Karma
More
Distribution
Amount
More Profit

21. What next?
You will be emailed your raise in this week along with the
formula
You can verify the numbers with our accountant if you want
to
You are still not allowed to discuss your salary or raise with
colleagues
You are not allowed to disclose whether you got a
performance bonus
You are not allowed to disclose profit figure outside the
company
Sorry but we can’t be transparent about above things as of
now

22. Any

?