Variable Performance Incentive Plan

Dear Seniors, am working in a startup IT company with around 18 employees. We are planning to implement Performance incentive plan once in a year based on the quaterly performance assement of the year.
Kindly help me in implementing 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 before disbursement of the incentive. These are:
a) Do you measure what deserves to be measured
b) Do you measure accurately whatever you measure and
c) People were paid on the one hand but organisation suffered losses on the another. 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. Else it would be faulty one. It's side effects you will come know but much later.
Thanks,
Dinesh Divekar

Thank you Sir for your valuable advice. We normally give appraisal once in a year with standard percentages, so i thought besides annual appraisal will also encourage employees with yearly incentive scheme so that employees will perform even more better.

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