DEEPTI,
I understand your situation. It is not an easy one.
Setting up a new performance linked variable pay system
would take time, but may not please many.
At the same time, the basic pay structure should not be disturbed.
I HAVE A SUGGESTION.
-review the company objectives / department objectives.
-take the employee job description .
-develop the 4/5 KEY RESULT AREAS [ KRAs ]
-for each KRA ,develop KPi [ KEY PERFORMANCE INDICATOR]
this should be done in conjunction with department heads.
==================================================
NOW HERE IS A SAMPLE CASE, OF A PROJECT MANAGER
HOW KRA / KPi IS APPLIED FOR PERFORMANCE PAYMENT.
=============================================
THESE ARE THE MAXIMUM 5 KRAs FOR THE POSITION/
WITH WEIGHTS [ IMPORTANCE ] FOR EACH KRA.
KRA 1: PROJECT MANAGEMENT AGILITY=======30%
KRA 2:CORPORATE OBJECIVE ALIGNMENT=====15%
KRA 3: VALUE FOR MONEY OUTCOME ======20%
KRA 4: PROJECT COLLABORATION ==============20%
KRA 5: PROJECT MANAGEMENT LEADERSHIP =======15%
TOTAL WEIGHTS........................................... .......................100
================================================== =
WHEN ANYONE [ BOSS/ PEER/ ANYONE ] APPRAISES THE
PROJECT MANAGER, THE APPRAISAL IS DONE FOR EACH
KRA [ KPi ] out of 10 ratings.
SUPPOSE THE BOSS RATES THE KRA [ KPi] OUT OF 10
AND GIVES THE RATINGS AS FOLLOWS
KRA 1: =30%------7/10
KRA 2:=15%-------8/10
KRA 3: =20%-----6/10
KRA 4: =20%------7/10
KRA 5: =15%-----8/10
--------------------------------------------------
TO GET THE WEIGHTED AVERAGE,
we multiply the weights by their respective ratings
KRA 1: =30% X 7 = 210
KRA 2:=15% X 8 = 120
KRA 3: =20% X 6 = 120
KRA 4: =20% X 7 = 140
KRA 5: =15% X 8 = 120
----------------------------------------------------
TOTAL =710
TOTAL MAXIMUM POSSIBLE = 100 X 10 =1000
THE SCORING OF THE BOSS =710/ 1000
OR 71%.
============================================
PAYMENT FOR PERFORMANCE
FOR SUCH EXERCISE, WE ADOPT THIS PRINCIPLE.
-the bonus is paid for performance.
-the performance is linked to the job responsibilties.
-the job responsibilities are reflected in the KRAs [ KPi ]
-pay is linked to the job description/ responsiblities/ KRAs [kpi ]
==============================================
SUPPOSE, THE PROJECT MANAGER IS ON 150,000 DOLLARS ANNUAL PAY.
80% OF THE PAY = 120,000 IS THE BASE PAY, WHICH IS FIXED.
WE ALLOCATE 20% OF THE ANNUAL PAY AS THE MAXIMUM PAYMENT
for PERFORMANCE.
WHICH IN THIS CASE IS 30,000 DOLLARS.
WE APPLY THE KRAs [ KPi ] evaluation method.
IN THIS CASE, IF THE PROJECT MANAGER ACHIEVES THE
RATING 71%
WE PAY THE PROJECT MANAGER 30,000 X 71% = 21,300 DOLLARS.
which is the performance linked pay .
THE TOTAL PAY = FIXED PART + PERFORMANCE BASED PAY.
=120,000 + 21,300 = 141,300.
IN THIS WAY , THERE WILL BE NO DISPUTE AS each one is paid
according to their
-responsibilty
-pay scale
-based on their performance
-same system / principle
=======================================
DEEPTI, SOMETHING TO THINK ABOUT.
################################################## ########3
REGARDS
LEO LINGHAM