Improving Productivity through a Strategic Profit Linked Incentive Scheme

Warding mediocrity, Rewarding meritocracy

A 3000-people manufacturing inspection company had traditionally allocated employee bonuses as a routine performance appraisal exercise, without linking such pay to performance. Naturally, there were chronic issues in productivity losses and top talent attrition across units. As its first HR outsourcing initiative, the company launched a HR Anexi designed Profit Linked Incentive (PLI) scheme, creating bonus pools for employees based on their performance. In addition to own performance, an individual’s bonus would be linked with his team’s or company’s profits. Branch heads were now allocated bonus pools based on their unit’s overall performance. As a result, incentives were solely based on an employee’s contribution to the overall business. This practice rewarded high performers substantially more, and inter-linked incentives among team members. In one stroke, the company saw improved top talent retention and productivity across units; as a result, average unit savings rose by 10% in less than a year!