How Do You Determine Incentives for Mechanical Engineers? Seeking Urgent Advice!

Dear All,

I am working on incentives for our Mechanical engineers. Kindly assist me with the parameters used to determine the incentives. This is quite urgent. Your help in this matter would be greatly appreciated.

Thank you,
Kavitha S

Hello friend,

You may list measures for their performance as a team or as a full department. I would suggest that you DO NOT design INDIVIDUAL PERFORMANCE-based incentives. For the percentage of "On-time delivery," percentage of rejection levels at different stages, percentage of new product development completed, percentage of customer field return complaints, etc. As you can see, some are positive indicators, and others are negative.

You can decide on a baseline performance of these parameters, and factors can be assigned for improvement. For example, last year, overall "On-time delivery" was at 75%. If the improvement is made for each 1% improvement, Rs 200/- will be the incentive [this is just an example]. Similarly, if the number of complaints last year was 25, for each 2% reduction in complaints, Rs 100/- will be the incentive.

I am not sure if the parameters I have mentioned are relevant, but you can decide on them after discussion with the functional heads. Hope such methodology will help.

Regards, Nishikant

What are they supposed to deliver? Have you defined measures for production, design, quality, service, and sales? Please provide more information.

Siva