How Can I Create an Effective Incentive Plan for a Small Manufacturing Team?

Hi,

Firstly, I think that this forum and website are the most brilliant community in HR. Kudos to the developer.

I am working for an HR consultancy firm, and my first project is for a manufacturing organization. Like any other small Indian manufacturing unit, this one, too, has plans to expand, but their processes are not in order. They are into automation, designing, building, etc. Their HR department comprises three people who basically take care of everything without any segregation of work. I have to formulate their incentive and profit-sharing plan for the whole technical staff. Any suggestions? Their strength is 50 staff and around 30 workers. I would really appreciate the comments.

Regards,
Ankita

Hello Ankita. I'm a little confused. You say you after ideas for an incentive and profit sharing plan. However, your post title refers to PMS (Performance Management System). Sure, the three are related, but they are not the same things. You can have a PMS with no incentives, for example. What is you want help with?
My first question is always: What systems, processes and behaviors are in place at the moment? Once you know where you are, you can have a more worthwhile discussion about where you want to go and how to get there. In the meantime, you can get some good ideas of PMS and incentives at http://www.businessperform.com/html/...anagement.html
Les Allan
Human Resources Tools
http://www.businessperform.com

Hi,

Point noted. To define where the company is right now will be a difficult task. Because the company was incorporated in 1988 manufacturing components it's only till 2005 when there automation department has started which has pushed them to start and reorganize there departments internally.

Yes I understand that appraisals could be a key to track performance and not necessarily linked to pay. However on paper they do have an appraisal system in order which is conducted by the respective HOD. However they want to revamp that so that the appraisals can be linked to measurable areas. That's where I need help. How do you formulate KRA's for a manufacturing firm that does not have too many defined target areas for all it's department. Lets take their HR dept for example the broad categories of work can be defined into…

Government license related jobs.

Provident fund

Tax statements

ESI work

NSIC

Recruitment

Compensation/payroll

Voucher preparation

Bonus calculation

Overtime payments

Exit interviews

I need help!!

Thanks

Ankita

Ankita, I suggest that you define the KRAs and KPIs with the CEO and management team. Ask them, “What are your strategic goals for the next year/five years?” Then break these down to the point where it becomes clear how each department can contribute to the achievement of these overall business goals. If the management team can't do this, then you will need a skilled facilitator that can work with the management team to tease this out.

If you try to set goals for each department and individual in isolation, you run the risk of these being divorced from the real needs of the organization and you may end up with just a great form filling exercise. At the micro level, with the HR tasks that you give as an example, for each task ask: “What are the measurable outcomes expected for each task?” For example, for Exit Interviews, it might be:

1. Exit interviews documented for a minimum of 80% of exits.

2. 90% of exit interviews from high performing employees lead to actioned items.

These micro goals will need to be tied to department goals, such as, “Reduce voluntary turnover by 20% by end of year”. And these will need to be tied to the overall business goals, such as, “Improve people capability of core skills by 40% by end of year”. This is where making clear the organization's strategic goals is so important. Without them, department and individual goals will just be left hanging. There is a lot more to it than this, however, this is a start.

Les Allan

Human Resources Tools

http://www.businessperform.com

Hi,

Great reply!! Believe me, I have tried doing that. I am taking it a little slow with the management because it's sad being an Indian Company, especially in manufacturing. They want to apply their expertise in one niche area of manufacturing through automation solutions. They will take time; however, in paper and conceptually, they want things in place. Yes, there is a big chance that this is going to be a form-filling exercise, but I'm hoping it culminates later into a process.

You've been of great help. I get the technical input but try and see this from the point of view of practical Indian Industry implementation. Do I set their goal for them or just wait until they figure it out? :)

Ankita

Hello again Ankita. The challenge you have is not peculiar to consulting in India. It is common in consulting assignments: Do I do it for them or do I help them to do it? I don't know the brief you have with your client. I see the brief being one of three types in which the consultant is:
1. a pair of hands, or
2. an expert, or
3. a collaborator working with the client to design/implement their own solutions
I reach an understanding with the client before the engagement begins about what type of consulting they want and feel comfortable with.
Les Allan
Human Resources Tools
http://www.businessperform.com