How Can We Effectively Start an Incentive Plan for Our Centralized HR Department?

Hi, our organization is thinking about implementing an incentive plan for the HR Department of our organization. We are a 12,000-employee retail organization, and the HR department is basically centralized except for three zonal-wise divisions in major metros. The central department comprises 25 employees, with a total of around 50.

Please suggest some parameters and a plan for the incentive program. How should we begin and proceed with it?

Hi Sunil,

The major area where the incentive plan can be implemented in the HR department is Recruitment. Since you are in the retail industry, you can set up incentives as done in consultancies. Depending on the number of employees recruited by the HR for the month, the incentive percentage can be fixed depending on the level, such as entry, middle, or manager level. Then, you can implement strategies to reduce attrition.

The lower the attrition rate, the more incentives can be given to the HR person. I hope you find this idea helpful.

Thanks a ton, Sangeet. I did get the clue from your reply, but I would be more than grateful if you could elaborate on the plan. For example, you mentioned incentives based on the number and level of candidates recruited, and then perhaps the attrition part. However, my question pertained to the overall general plan as a part of the policy because in our HR Department, we have individuals working in the following areas:

- RECRUITING
- JOINING FORMALITY & EXIT
- SELECTION (BASED ON THE POST, FOR EXAMPLE: HIGHER THE POST, HIGHER GOES THE SELECTORS HIERARCHY)

I understand that personnel and training are also parts of HR, but we have independent departments for them.

I am focusing on an incentive plan that doesn't make the strong stronger and the weak weaker but aims for overall improvement for seniors, juniors, and freshers as well. Please help me out. Thanks once again, and I am waiting for your reply.

Adding to what Sangeet has said, along with the normal procedures, the following can be done for each of your departments as applicable to them:

1) RECRUITMENT & SELECTION:

You can use the following metrics for measuring recruitment efficiency:

a) Improvement satisfaction index/percentage satisfaction from the customer departments for whom you are recruiting. Based on your volume, start a monthly or quarterly feedback system and use that data to measure the percentage improvement in the subsequent quarters/months. Use multiple components in the feedback such as "satisfaction with the skill/competency of the recruit, fit to job profile, and time to fill vacancies and hit rate."

b) Improvement in time to fill vacancies in the number of days can be a separate criterion.

c) Improvement in hit rate (number of people selected to the number of people interviewed).

2) JOINING AND EXIT FORMALITIES:

Here, points a and c are difficult to implement and may cause discontent, but point b is a very effective means of improving your procedures:

a) Satisfaction surveys for every person recruited regarding joining formalities.

b) Noting down and registering complaints/areas for improvement regarding joining and exit formalities and the number of issues resolved.

3) Satisfaction surveys for the exit procedure and the percentage improvement in the same.