firstname.lastname@example.orgI want to draft a policy on performance-based variable pay in my company. Someone can send such a draft policy in case you have it with you. What treatment we can give if some employees leave the organization before declaring variable pay results?
From India, Lucknow
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NK SUNDARAMI have a few queries to ask you first. Do you have a proper performance management system in place ? A Robust one ? If you can share with me your current system, policies, rating, linkage with rewards, I will be able to give you good professional advice. I have over 52 years of industry experience including 33 years with Larsen and Toubro. You can check out my profile in Linkedin, our website etc. Awaiting to hear from you and with best wishes
nanu1953Variable pay usually based on Organization performance as well as individual performance. If some individuals are doing well but the overall organization is suffering, the purpose of variable pay gets loss. On the other way if the organization is doing well but some individuals are not performing well then also everyone should not be treated equally.
One very simple variable pay structure may be certain % of target ( CTC or Monthly gross ) for different level and different individual at the beginning of the year to be declared based on achieving targeted PBI and individual performance ( considering proper PMS is in system ). 60 or 70 % may be based on business result and 40 or 30% based on individual performance. There may be one flexible scale where if the PBI exceeds its target subject to maximum 15 or 20 % , the payout will also increase 15 or 20 % of the target. Similarly if the PBI achieved less subject to below level 80 or 85 % of target, the payout will also be less.
In case of individual performance, it may be in similar way that outstanding may get 15 or 20 % extra, Good may be 5 or 10% extra, Successful may get 100% of target and Needs improvement below the target may be 80 or 85 % or nil.
The employees who will be in the roll of the organization on the date of disbursement of the variable pay - will only be eligible for the payment. This will also help to some extend the control of attrition rate.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
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From India, New Delhi