I recommend you keeping the existing procedure of linking salary increment to the performance as it is.
Now about attainment of revenue targets. The extra revenue generated could be in the form of additional payout rather than making it substitute for the individual's KRAs.
You can disburse the % additional revenue generated. What that % is can well be decided by your management. Let me give you example:
If the revenue target is say Rs 100 Crore. If the target is attained or exceeded then ___ % to be disbursed amongst all the 150 staff employees.
My personal view: - The policy of revenue sharing is detrimental. It will set a wrong precedent. Company none less than Infosys has huge stockpile of cash of Rs 22,500 Crore. Does it mean that they disbursed the amongst the employees? Rather they restricted the salary increase to just 6-8%
The one more argument is about profit. Revenue figures are deceptive. What if higher revenue is generated but profit per cent is low?
Companies make profit or loss. Management should be equanimous to both. Employees should be paid regular salary increment or performance linked bonus and nothing else.
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There is lot of misconception on the concept of KPI and KRA. To remove this misconception, I have uploaded my presentation on Youtube. To refer that video, you may click here.
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Dinesh V Divekar
14th May 2014 From India, Bangalore
Thanks for your valuable response and expert advice.
I will definitely put this advice across the management and will try to get their views on it.
In case they would still like to go for the said arrangement, so can you help me in understanding such implementation of performance management.
16th May 2014 From India, Mumbai