In India however, the situation is very different. Employees in India generally tend to discuss each other's salaries and increments quite openly. In fact I sometimes see cases where the employee walks out of his manager's cabin after his appraisal discussion straight into the hands of his waiting peers brandishing his increment form. To most people this looks fair. This makes sure that the company treats every one fairly as the veil of secrecy is lifted. However, the one thing that many people fail to appreciate is the fact that humans by nature are consumed by envy. We covet what some one else has and often compare ourselves pretty harshly with our peers. And this comparison is seldom objective. In the case of the salary increments, it is not often that one looks at his/her peer in a positive frame of mind and try to assess the reasons for the difference in treatment. Rather, the human mind looks for extraneous reasons like favoritism etc to explain the difference. This breeds resentment and a sense of unfairness which could then reflect in his/her work . In a business environment it is even more difficult to explain some aspects in terms of how the value of an employee differs from another to justify this difference in treatment.

What all this results in is that in India it is difficult to "positively discriminate" an excellent performer from an average performer beyond a certain point. This mitigates the motivational power of the salary increments and reduces it to an annual exercise where the pie is divided in an apparently fair manner from the employee's point of view. For a business to thrive, people who contribute the most need to be recognized, appreciated and motivated (I am of course talking about those businesses which aim to be fair and do the best they can for their employees). The Annual salary increment is the greatest tool that a manager has at his disposal to do this. I think this tool gets blunted somewhat as a result of this behavior.