How Can I Implement a Performance-Based Salary System in My Company? Seeking Advice!

Implementing a Performance-Based Increment System

In my company, increments are decided by the Director. Generally, it is flat, meaning 15% to 20% for all employees. I want to build a system such as a Performance Management System (PMS) where increments depend on performance. Therefore, employees who work hard during the year will receive higher increments. Please guide me.

Awaiting your response.

With Regards,
Vineet Deshmukh

The percentage of increment should be the same for all employees. You can consider providing a performance-linked bonus to the employees, which is commonly used by companies for employee motivation.

I disagree with Pooja. In the PMS system, the percentage of increment varies according to their rating. It cannot be the same for all employees.

Pon

Oops, I misunderstood the question. On, Sir... Yes, in the PMS system, the percentage of increment varies.

Thank you, Pooja & Pon Sir, for your reply. I am thinking of developing a PMS in my organization. One proposal is in my mind about PMS (Management approval still remaining) I want to share with you:

First, I want to develop PMS in the Engineering Department.

Following points I have considered about PMS:

1) I am distributing their (Engineers') performance into two parts:
a) Regular Work
b) Projects.

a) Regular Work:
➔ In regular work, the following things I am considering:
1) Attendance
2) In-time - Out-Time
3) Logbooks Maintaining
4) Breakdown Performance
5) Consumption Performance, etc.

Each criterion has separate marks. Some percentage of the increment is fixed for regular work criteria. This percentage of the increment is given according to their marks obtained in these criteria.

b) Projects:
➔ Some percentage of the increment is fixed for projects criteria, and this increment in percentage is only given after the completion of the project. For example, if one project is given to 5 Engineers under the heading of "To reduce Breakdown by 10%." If engineers are successful in these projects, then a separate percentage of the increment is given to the team after analysis by Management.

Awaiting your response.

With Regards,
Vineet Deshmukh

If your director is giving out a flat rate to all employees, wouldn't you be contradicting his/her policy by coming out with a scaled reward system? If you'd like to use a Performance Management System (PMS), the simplest way is to lump up the overall increment budget to your department and distribute from there based on staff ratings.

Regards,
Daeren

It has been observed that employees who work at higher levels are dissatisfied with this system. Therefore, I would like to develop this PMS system. Thank you for your suggestion.

With Regards,
Vineet Deshmukh