Dear Sirs,
I wish to introduce a performance bonus for my top management (Plant Heads) to enhance their sense of belonging and responsibility towards their work. How can I implement this? Our company is a large secondary steel manufacturing setup.
Kindly suggest.
Regards
From India, Nagpur
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I wish to introduce a performance bonus for my top management (Plant Heads) to enhance their sense of belonging and responsibility towards their work. How can I implement this? Our company is a large secondary steel manufacturing setup.
Kindly suggest.
Regards
From India, Nagpur
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Dear Suresh Jakhotiya,
Yes, a performance bonus is one of the means of motivating employees. However, one cannot introduce a performance bonus solely to improve their sense of belongingness and responsibility towards their work.
If pecuniary gains were sufficient to enhance responsibility, then why rely on a performance bonus? Simply increasing the salary could resolve the matter.
A sense of belongingness and responsibility towards work arises from the organization's culture. Culture is complex, and various sub-cultures coexist.
Merely paying a performance bonus to a plant head does not suffice. He/she has to get work done by his/her subordinates. What if his/her subordinates are not capable of delivering the desired level of performance?
Yes, introduce the performance bonus, but first conduct a survey of the organization's culture. You need to identify which factors are hindering the organization's culture.
Performance Measurement
Returning to your query, the performance bonus will depend on the measures of performance. Do you measure performance scientifically? If yes, which costs and ratios are measured scientifically? Do you have the technical infrastructure to measure the costs and ratios associated with your business accurately? I ask these questions because, in your city of Nagpur, I have provided consulting services to one of the prominent pharmaceutical companies. Additionally, I have provided PMS consulting services at other places too.
If you are in manufacturing, do you measure the "Cost of Quality" (COQ) and the "Cost of Poor Quality" (COPQ) scientifically? Along with these two costs, do you measure the Inventory Turnover Ratio (ITR) scientifically? Measuring these two costs and a ratio will be the beginning. For other things, feel free to contact me.
Thanks,
Dinesh Divekar
From India, Bangalore
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8072Yes, a performance bonus is one of the means of motivating employees. However, one cannot introduce a performance bonus solely to improve their sense of belongingness and responsibility towards their work.
If pecuniary gains were sufficient to enhance responsibility, then why rely on a performance bonus? Simply increasing the salary could resolve the matter.
A sense of belongingness and responsibility towards work arises from the organization's culture. Culture is complex, and various sub-cultures coexist.
Merely paying a performance bonus to a plant head does not suffice. He/she has to get work done by his/her subordinates. What if his/her subordinates are not capable of delivering the desired level of performance?
Yes, introduce the performance bonus, but first conduct a survey of the organization's culture. You need to identify which factors are hindering the organization's culture.
Performance Measurement
Returning to your query, the performance bonus will depend on the measures of performance. Do you measure performance scientifically? If yes, which costs and ratios are measured scientifically? Do you have the technical infrastructure to measure the costs and ratios associated with your business accurately? I ask these questions because, in your city of Nagpur, I have provided consulting services to one of the prominent pharmaceutical companies. Additionally, I have provided PMS consulting services at other places too.
If you are in manufacturing, do you measure the "Cost of Quality" (COQ) and the "Cost of Poor Quality" (COPQ) scientifically? Along with these two costs, do you measure the Inventory Turnover Ratio (ITR) scientifically? Measuring these two costs and a ratio will be the beginning. For other things, feel free to contact me.
Thanks,
Dinesh Divekar
From India, Bangalore
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Dear Suresh,
Performance Bonus Attributes for Leaders
Performance bonuses can be conferred based on the following attributes of leaders:
1. Aligning with the organization's vision, mission, and values
2. Business acumen
3. Developing future leaders
4. Leading by example
5. Retention rate in the department
6. Time-bound and quality results by team/department
7. Individual upskilling efforts
8. Acting as a change agent
From India, Karjat
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Performance Bonus Attributes for Leaders
Performance bonuses can be conferred based on the following attributes of leaders:
1. Aligning with the organization's vision, mission, and values
2. Business acumen
3. Developing future leaders
4. Leading by example
5. Retention rate in the department
6. Time-bound and quality results by team/department
7. Individual upskilling efforts
8. Acting as a change agent
From India, Karjat
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Dear Mr. Ajay Sawant,
The performance bonus is paid when the performance exceeds the target given. However, it requires measurement. In your post, you have given eight attributes on which the performance bonus can be paid. The performance of the following attributes is measurable but, as written in my previous post, "scientific measurement" is no easy task. It requires a proper mechanism in place:
5. Retention rate in the Dept.
6. Time-bound & Quality Results by Team/Dept.
7. Individual Upskilling Efforts
However, would you mind explaining how to measure the performance on the following attributes:
1. Living by Organization's Vision, Mission & Values
2. Business Acumen
3. Creating Future Leaders
4. Leading by Examples
and
8. Acting as Change Agent
In case you have a case study on the measurement of the attributes, please share it.
Thanks,
Dinesh Divekar
From India, Bangalore
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The performance bonus is paid when the performance exceeds the target given. However, it requires measurement. In your post, you have given eight attributes on which the performance bonus can be paid. The performance of the following attributes is measurable but, as written in my previous post, "scientific measurement" is no easy task. It requires a proper mechanism in place:
5. Retention rate in the Dept.
6. Time-bound & Quality Results by Team/Dept.
7. Individual Upskilling Efforts
However, would you mind explaining how to measure the performance on the following attributes:
1. Living by Organization's Vision, Mission & Values
2. Business Acumen
3. Creating Future Leaders
4. Leading by Examples
and
8. Acting as Change Agent
In case you have a case study on the measurement of the attributes, please share it.
Thanks,
Dinesh Divekar
From India, Bangalore
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Dear Mr. Ajay Sawant,
Attributes 1 to 4 and 8: A Risky Proposition
Attributes 1 to 4 and 8 are not measurable. It would be a great risk on the part of the MD to consider them as performance attributes and start disbursing bonuses. What is not measurable is perception-driven. Bonuses are for achieving tangible results, not satisfying one's perception.
Leadership Qualities vs. Tangible Results
Attributes 1 to 4 and 8 are the qualities or traits of leadership. Each leader must possess them. However, merely possessing the qualities or traits is not sufficient; what output is delivered because of them is important.
Investor Expectations and Business Realism
The stakeholders or investors who invest in the business are hard-nosed businesspeople. They expect tangible results. To give them higher returns, the first requirement is to embrace realism or come out of the world of fantasy. It is a penchant of people in certain disciplines of management to take the fancy of the terms which are characteristic to them. However, business expansion or growth does not happen because of the fanciness!
Thanks,
Dinesh Divekar
From India, Bangalore
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Attributes 1 to 4 and 8: A Risky Proposition
Attributes 1 to 4 and 8 are not measurable. It would be a great risk on the part of the MD to consider them as performance attributes and start disbursing bonuses. What is not measurable is perception-driven. Bonuses are for achieving tangible results, not satisfying one's perception.
Leadership Qualities vs. Tangible Results
Attributes 1 to 4 and 8 are the qualities or traits of leadership. Each leader must possess them. However, merely possessing the qualities or traits is not sufficient; what output is delivered because of them is important.
Investor Expectations and Business Realism
The stakeholders or investors who invest in the business are hard-nosed businesspeople. They expect tangible results. To give them higher returns, the first requirement is to embrace realism or come out of the world of fantasy. It is a penchant of people in certain disciplines of management to take the fancy of the terms which are characteristic to them. However, business expansion or growth does not happen because of the fanciness!
Thanks,
Dinesh Divekar
From India, Bangalore
Acknowledge(0)Amend(0)
Creating a Performance Bonus Structure
1. Create a clear and measurable performance bonus structure. This should include specific criteria and metrics that you expect your plant heads to achieve in order to earn a bonus. Make sure that the criteria and metrics are achievable and relevant to the roles and responsibilities of your plant heads.
2. Establish a timeline for the performance bonus. This should be based on the desired performance improvement and the length of time it will take to achieve it.
3. Set a monetary value for the bonus. Determine the amount of money or percentage of salary that the bonus will be worth and make sure it is a fair and motivating reward.
4. Communicate the bonus structure to your plant heads. Make sure they understand the criteria and timeline for earning the bonus, and how their performance will be measured.
5. Monitor progress and reward accordingly. Track progress to ensure that your plant heads are meeting the criteria and timeline for earning the bonus. Provide positive feedback and recognition when they do so.
From India, Mumbai
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1. Create a clear and measurable performance bonus structure. This should include specific criteria and metrics that you expect your plant heads to achieve in order to earn a bonus. Make sure that the criteria and metrics are achievable and relevant to the roles and responsibilities of your plant heads.
2. Establish a timeline for the performance bonus. This should be based on the desired performance improvement and the length of time it will take to achieve it.
3. Set a monetary value for the bonus. Determine the amount of money or percentage of salary that the bonus will be worth and make sure it is a fair and motivating reward.
4. Communicate the bonus structure to your plant heads. Make sure they understand the criteria and timeline for earning the bonus, and how their performance will be measured.
5. Monitor progress and reward accordingly. Track progress to ensure that your plant heads are meeting the criteria and timeline for earning the bonus. Provide positive feedback and recognition when they do so.
From India, Mumbai
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Set Clear Goals and Objectives:
Define the desired outcomes of your performance bonus program, such as productivity improvement, quality enhancement, or customer satisfaction. Develop specific and measurable goals aligned with your objectives.
Choose the Right Metrics:
Select metrics that are specific, measurable, achievable, relevant, and time-bound (SMART). For productivity improvement, consider metrics like units produced per hour or defects per unit.
Communicate the Program to Your Employees:
Ensure your managers understand the program's goals, objectives, and metrics. Clearly explain how bonuses will be calculated and awarded.
Set a Budget:
Determine a budget that considers the size of your company, program goals, and chosen metrics. Allocate resources effectively to sustain the program.
Track Your Results:
Collect and analyze data based on the chosen metrics to evaluate program effectiveness. Assess if the program is meeting goals and producing desired outcomes.
Make Adjustments as Needed:
Be flexible and willing to make changes based on results and feedback. Modify goals, refine metrics, or revisit the budget to improve the program's effectiveness.
By following these suggestions, you can introduce a performance bonus program to your top management that aligns with your objectives, motivates your managers, and drives desired outcomes. Clear communication, effective tracking of results, and adaptability are key elements for long-term success.
From India, Dombivali
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Define the desired outcomes of your performance bonus program, such as productivity improvement, quality enhancement, or customer satisfaction. Develop specific and measurable goals aligned with your objectives.
Choose the Right Metrics:
Select metrics that are specific, measurable, achievable, relevant, and time-bound (SMART). For productivity improvement, consider metrics like units produced per hour or defects per unit.
Communicate the Program to Your Employees:
Ensure your managers understand the program's goals, objectives, and metrics. Clearly explain how bonuses will be calculated and awarded.
Set a Budget:
Determine a budget that considers the size of your company, program goals, and chosen metrics. Allocate resources effectively to sustain the program.
Track Your Results:
Collect and analyze data based on the chosen metrics to evaluate program effectiveness. Assess if the program is meeting goals and producing desired outcomes.
Make Adjustments as Needed:
Be flexible and willing to make changes based on results and feedback. Modify goals, refine metrics, or revisit the budget to improve the program's effectiveness.
By following these suggestions, you can introduce a performance bonus program to your top management that aligns with your objectives, motivates your managers, and drives desired outcomes. Clear communication, effective tracking of results, and adaptability are key elements for long-term success.
From India, Dombivali
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Why Improving Performance Management Systems Is So Difficult.doc