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Manual For Performance Based Pay System

The document outlines revisions to the company's Performance Based Variable Pay scheme. Key points include: 1) The scheme now covers managerial, executive, and staff employees across all company divisions. 2) Variable pay can be up to 45% of basic salary, determined by individual, team, and organizational performance metrics. 3) Performance is evaluated each quarter, with variable pay adjusted based on actual performance that quarter.

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Tushar Shirwalkar
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85 views

Manual For Performance Based Pay System

The document outlines revisions to the company's Performance Based Variable Pay scheme. Key points include: 1) The scheme now covers managerial, executive, and staff employees across all company divisions. 2) Variable pay can be up to 45% of basic salary, determined by individual, team, and organizational performance metrics. 3) Performance is evaluated each quarter, with variable pay adjusted based on actual performance that quarter.

Uploaded by

Tushar Shirwalkar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Date - 30th Oct 2015

Performance Based Variable Pay Scheme – Revised November 2015

Present Performance Based Variable Pay system, is being issued with certain revisions as below -

1. Scope

Performance Based Variable Pay Scheme covers all the Managerial and Executive Cluster and Staff
of all divisions of the Company.

2. Variable Pay

Variable pay would be paid in proportionate to the performance of an employee up to a maximum of


45 % of his/ her basic salary.

Variable Pay would be payable after completion of a quarter. For the purpose of smoothening of the
monthly pay packet, Variable Pay would be paid at a fixed rate of 30 % of employee’s basic salary
for the first two months of a quarter.

Variable pay for the last month of the quarter will be adjusted based on the actual performance of the
Employee for the quarter.

Reporting manager will discuss Employee’s performance for a quarter on/ before 10th day of the next
quarter and would forward the rating to HR by 15th day.

3. Composition of Variable Pay -

For different categories of employees, Variable Pay would be calculated based on following weight -

Group Individual Team Organizational


Performance Performance Performance
Managerial Cluster 30 % 30 % 40 %
Executive Cluster 40 % 40 % 20 %
Staff Cluster 40 % 40 % 20 %

4. Individual Performance

Individual KRA’s should be based on SMART principle (Specific, Measureable, Achievable, Relevant
& Time Bound)

Reporting Manager should finalize and handover individual KRA targets for each individual at the
beginning of the quarter. This will also include performance measurement methodology consisting of
worksheets/ charts etc.

Employees should measure and rate their own performance using standardized reporting formats/
procedures/ deadlines etc. This will be reviewed by reporting manager and will accordingly calculate
percent achievement.
No Variable Pay would be payable at a performance level of 70% or lower. The Performance v/s
Score graph is as per following graph -

INDIVIDUAL PERFORMANCE GRAPH


110%
100%
90%
80%
S c o r e (% )

70%
60%
50%
40%
30%
20%
10%
0%
65.0 70.0 75.0 80.0 85.0 90.0 95.0 100.0 105.0 110.0 115.0 120.0 125.0 130.0
% % % % % % % % % % % % % %
Performance (% )

5. Team Performance

Team KRA targets will be decided by Heads of Divisions/ Heads of Departments for their teams.

Heads of Departments will calculate team performance for their team based on degree of
achievement as compared to KRA targets.

No Variable Pay would be payable at a performance level of 70% or lower. The Performance v/s
Score graph is as per following graph -
TEAM PERFORMANCE GRAPH
110%
100%
90%
80%
S c o re (% )

70%
60%
50%
40%
30%
20%
10%
0%
60% 65% 70% 75% 80% 85% 90% 95% 100 105 110 115 120 125 130
% % % % % % %
Performance (% )

6. Organization Performance

The Organizational Performance would be derived from actual Profit Before Tax (PBT), v/s Budgeted
PBT for the quarter being reviewed.

For Employees attached to a specific division, PBT and corresponding Organizational Performance
of the respective Division would be considered.
For Employees in Corporate group, consolidated PBT and corresponding Organizational
Performance of the Company as a whole, would be considered, before exceptional items.

7. Annual Performance Appraisal

Composition of Annual performance appraisal score will be as follows –

Average individual KRA performance throughout the year 60 %


Job Competence, Soft Skills & Behavioral Traits 40 %

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