How Can We Implement a Yearly Performance Incentive Plan in Our Small IT Startup?

Dear Seniors,

I am working in a startup IT company with around 18 employees. We are planning to implement a performance incentive plan once a year based on the quarterly performance assessment of the year. Kindly help me in implementing the process and please share your views/opinions.

Dear Mithun, Possibly, your query could be on the quantum of the incentive. However, three important factors precede the disbursement of the incentive. These are:

a) Do you measure what deserves to be measured?

b) Do you measure accurately whatever you measure?

c) People were paid on one hand, but the organization suffered losses on the other. Management or HR is unaware of those losses.

Unless you have clear answers to the above questions, my humble recommendation is not to start the performance incentive plan. Otherwise, it would be a faulty one. Its side effects you will come to know, but much later.

Thanks,

Dinesh Divekar

Thank you, sir, for your valuable advice. We normally give appraisals once a year with standard percentages, so I thought, besides the annual appraisal, we should also encourage employees with a yearly incentive scheme. This will motivate employees to perform even better.

Such an incentive has to be measurable in an objective manner rather than a subjective one. For example, someone's attendance can be checked from the timekeeping system or data entered in a day can be measured. However, at higher levels, the work done and its accuracy (if that is what you mean by performance) many times are not capable of being measured objectively. I do not think there can be any general formula for this.