Hi, I have been asked by the management to prepare a Performance Linked Incentive (PLI) for field employees such as sales, marketing, purchase, and service. Can anyone please suggest to me the format of the salary structure with PLI? Also, please advise on what all needs to be taken into account before introducing the PLI in the CTC.
Please help.
From India, Kolkata
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1Please help.
From India, Kolkata
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Hello,
Designing a Performance-Linked Incentive (PLI) scheme for field employees involves several key considerations. Here's a step-by-step guide that you can follow:
1. 📈 Identify Key Performance Indicators (KPIs): The first step is to identify the performance metrics on which the incentives will be based. For sales/marketing personnel, this could be the sales targets achieved, the number of new clients acquired, etc. For service/purchase, it could be tied to procurement savings or customer satisfaction rates.
2. 🎡 Determine the Incentive Percentage: Decide what percentage of the CTC will be variable and linked to performance. This could range from 10-30%, depending on your company's policy and industry norms.
3. 🏦 Set Clear Targets: Define clear, measurable targets for each role. The targets should be realistic, based on the employee's role, responsibilities, and the industry benchmark.
4. 🏶 Structure the Incentive Payout: Decide whether the incentives will be paid monthly, quarterly, half-yearly, or annually. This can depend on the nature of the targets and the cash flow of your company.
5. 🈂️ Create a Payout Slab: It may be beneficial to create a tiered incentive structure, where the incentive payout increases with the level of achievement.
Let's take an example:
CTC: INR 10,00,000
Fixed Pay: INR 7,00,000 (70%)
Variable Pay (PLI): INR 3,00,000 (30%)
For the variable pay:
- If the employee achieves 80% of the target, they get 60% of the PLI, i.e., INR 1,80,000
- If the employee achieves 100% of the target, they get 100% of the PLI, i.e., INR 3,00,000
- If the employee achieves 120% of the target, they get 120% of the PLI, i.e., INR 3,60,000
Before introducing the PLI, consider the following:
✅ Communication: Clear communication to the employees is crucial. They should understand the KPIs, targets, and how the PLI would be calculated.
✅ Legal Aspects: Ensure that the PLI scheme complies with the labor laws and policies in India, especially the Payment of Bonus Act, 1965.
✅ Feedback: Have a transparent system for employees to raise their concerns or disputes related to the PLI.
✅ Review and Revise: Regularly review and revise the PLI scheme to keep it relevant and motivating for the employees.
Hope this helps!
From India, Gurugram
Acknowledge(0)Amend(0)
Designing a Performance-Linked Incentive (PLI) scheme for field employees involves several key considerations. Here's a step-by-step guide that you can follow:
1. 📈 Identify Key Performance Indicators (KPIs): The first step is to identify the performance metrics on which the incentives will be based. For sales/marketing personnel, this could be the sales targets achieved, the number of new clients acquired, etc. For service/purchase, it could be tied to procurement savings or customer satisfaction rates.
2. 🎡 Determine the Incentive Percentage: Decide what percentage of the CTC will be variable and linked to performance. This could range from 10-30%, depending on your company's policy and industry norms.
3. 🏦 Set Clear Targets: Define clear, measurable targets for each role. The targets should be realistic, based on the employee's role, responsibilities, and the industry benchmark.
4. 🏶 Structure the Incentive Payout: Decide whether the incentives will be paid monthly, quarterly, half-yearly, or annually. This can depend on the nature of the targets and the cash flow of your company.
5. 🈂️ Create a Payout Slab: It may be beneficial to create a tiered incentive structure, where the incentive payout increases with the level of achievement.
Let's take an example:
CTC: INR 10,00,000
Fixed Pay: INR 7,00,000 (70%)
Variable Pay (PLI): INR 3,00,000 (30%)
For the variable pay:
- If the employee achieves 80% of the target, they get 60% of the PLI, i.e., INR 1,80,000
- If the employee achieves 100% of the target, they get 100% of the PLI, i.e., INR 3,00,000
- If the employee achieves 120% of the target, they get 120% of the PLI, i.e., INR 3,60,000
Before introducing the PLI, consider the following:
✅ Communication: Clear communication to the employees is crucial. They should understand the KPIs, targets, and how the PLI would be calculated.
✅ Legal Aspects: Ensure that the PLI scheme complies with the labor laws and policies in India, especially the Payment of Bonus Act, 1965.
✅ Feedback: Have a transparent system for employees to raise their concerns or disputes related to the PLI.
✅ Review and Revise: Regularly review and revise the PLI scheme to keep it relevant and motivating for the employees.
Hope this helps!
From India, Gurugram
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