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Dear all,
We are introducing new pay structure, grade and designation in the organisation wherein the CTC of the employees will remain the same however it will split into fixed and variable parts. As per the new policy, based on the no. of years of experience, he/she will get CTC as per the below:
Exp Fixed Variable
(in yrs) % %
0-2 100 0
2-4 90 10
4-6 90 10 (there will be some difference in the job responsibility)
6-8 80 20
8-12 80 20 (there will be some difference in the job responsibility)
10-15 67 33
15+ 60 40
Please help me in understanding:
1. If i've to issue letters to them, what to write in terms of their variable payout (which will depend on their performance and achievement of target)?
2. What should be the actual format of the letter?
3. Should i give their job description in the same letter?
PS: The subject of the letter will be "Revision in Pay Structure and Designation"
Regards

Hi Ditti,
How are you? This your friend Dino again. Personally i suggest you to follow Indian salary structure. This will help you to adhere Indian systems. Yes, if you are going to give new designation to your employees, its required to explain their responsibilities in the same letter.
Please follow the attachment.

Hi Dino,
Thanks for your response. However i still have a query.
How to define the variable payout in the letter or if you have any such format that you can share.
Thanks again

Hi ditti,
I am jaya here. i went through your query. I want to know in which sector are you working in, if you are working in manufactoring sector then you can have production incentive as one of the variable part. Other things can be Performance allowance, mobile allowance, Grade allowance etc..
Hope this one helps you.
Regards,
Jaya

Suppose an employee’s CTC was 10,000/-. Now, as per your policy if he is 4yrs old in your company, his fixed component will be Rs. 9000/-(90%) and Maximum of the variable component will be 1000/-(10%).

However you are saying that the variable component will depend upon his/her performance. Isn’t?

Now, I personaly feel , you can explain in the letters that the variable component will be paid as under:

Appraisal Grade: Excellent -- Very Good -- Good-- Av. ---Poor

Percentage of variable
component: 100% ---- 100%---- 80%----60% ---- 40%


Now an excellent or very good employee will retain his earler CTC 10000/-

But A good employee will get (9000+800)/=9800/-
Average will get (9000+600)/-=9600/-

Hi Ditti,
You can mention below mentioned in the letter for PLI ( Performance linked Incentive)
· The performance linked incentive will be based on your performance during the year. This amount will be payable on achievement of -----% of your target and will be therefore be different for differing levels of performance. You will need to achieve a minimum of ----% of your targets to be eligible for this incentive.
Regards,
Harshad

Hi Ditti,
I am also wkng with an IT co. and we also have the variable based on the performance and achievement. The Term which can be used for this, is PBI i.e. "Performance Based Incentive". Which can be given monthly or quarterly basis after the evaluation of the individual.
I think that you should not attach the JD with the letter, where as you can seperately give the KRAs or JD to individual.
Regards,
Sakshi