Hello,
We are planning to introduce a variable pay concept in our organization for upper layers such as Team Leads, Department Heads, and Project Managers. Can anyone help me find out some parameters for Project Managers? I mean, what will be the best parameters to consider for releasing variable pay. We are content with a fixed salary + variable pay concept where Project Managers can earn extra based on their performance or the parameters. Kindly share your thoughts so that I can plan accordingly.
Regards,
Jit
From India, Mumbai
Acknowledge(0)
Amend(0)
We are planning to introduce a variable pay concept in our organization for upper layers such as Team Leads, Department Heads, and Project Managers. Can anyone help me find out some parameters for Project Managers? I mean, what will be the best parameters to consider for releasing variable pay. We are content with a fixed salary + variable pay concept where Project Managers can earn extra based on their performance or the parameters. Kindly share your thoughts so that I can plan accordingly.
Regards,
Jit
From India, Mumbai
Acknowledge(0)Amend(0)
Dear Jit, you would like to link the variable to the performance. Following are the challenges in doing that:
Identifying Business Ratios
a) First and foremost, you need to identify the ratios associated with your business. These ratios need to be assigned to the respective Project Manager. Though it appears easy, it is not that simple.
Defining Performance Standards
b) Very accurately defining the performance standards. Do you have capable people to do this? Even though persons spend 20-25 years in a particular field, they may not acquire the capability to devise the KPIs for their organization. Therefore, you need to hire an external consultant for this.
Implementing IT Systems
c) Defining measures apart, you need to have IT systems or CRMs to measure the performance. There should be no room for manual records in the form of MS Excel. All the performance measures should be calculated automatically. These should be system-generated.
Example of Automated Systems
d) In support of (c), let me give you an example. In big retail stores or hypermarkets, the barcodes of the merchandise are scanned three times. Once while receiving the shipments to the warehouse of the retail store. Many times the warehouse could be on the ground floor or basement of the hypermarket. Second, when the merchandise is transferred to the retail store for sale, and third when the customer buys the goods or merchandise. With every scan, the MIS at the back end gets generated automatically, and the software spews the various reports, ratios, etc. Therefore, there are no manual reports or data entry work. Scanning is also done when the merchandise is returned or damaged, but I am not considering that as it is of a minuscule percentage. Of course, these scans are also part of the MIS.
Final Comments
It is the wish of every business to pay its employees as per their performance. However, a lot of groundwork is required to capture the performance. Otherwise, people start manipulating, which results in the frustration of a few. Therefore, performance pay, which was aimed to motivate, becomes the cause of demotivation. Consider the risks associated with the incomplete work or half job as well. My comments are based on my experience of providing my consulting services on Performance Management System (PMS). For further details, feel free to contact me.
Thanks,
Dinesh Divekar
From India, Bangalore
Acknowledge(1)Amend(0)
8072Identifying Business Ratios
a) First and foremost, you need to identify the ratios associated with your business. These ratios need to be assigned to the respective Project Manager. Though it appears easy, it is not that simple.
Defining Performance Standards
b) Very accurately defining the performance standards. Do you have capable people to do this? Even though persons spend 20-25 years in a particular field, they may not acquire the capability to devise the KPIs for their organization. Therefore, you need to hire an external consultant for this.
Implementing IT Systems
c) Defining measures apart, you need to have IT systems or CRMs to measure the performance. There should be no room for manual records in the form of MS Excel. All the performance measures should be calculated automatically. These should be system-generated.
Example of Automated Systems
d) In support of (c), let me give you an example. In big retail stores or hypermarkets, the barcodes of the merchandise are scanned three times. Once while receiving the shipments to the warehouse of the retail store. Many times the warehouse could be on the ground floor or basement of the hypermarket. Second, when the merchandise is transferred to the retail store for sale, and third when the customer buys the goods or merchandise. With every scan, the MIS at the back end gets generated automatically, and the software spews the various reports, ratios, etc. Therefore, there are no manual reports or data entry work. Scanning is also done when the merchandise is returned or damaged, but I am not considering that as it is of a minuscule percentage. Of course, these scans are also part of the MIS.
Final Comments
It is the wish of every business to pay its employees as per their performance. However, a lot of groundwork is required to capture the performance. Otherwise, people start manipulating, which results in the frustration of a few. Therefore, performance pay, which was aimed to motivate, becomes the cause of demotivation. Consider the risks associated with the incomplete work or half job as well. My comments are based on my experience of providing my consulting services on Performance Management System (PMS). For further details, feel free to contact me.
Thanks,
Dinesh Divekar
From India, Bangalore
Acknowledge(1)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
VARIABLE PAY.doc