Designing profit-linked incentive scheme

Performance Management

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.

HR Outsourcing Initiatives included:-

  • Launching of Profit Linked Incentive (PLI) scheme designed by HR Anexi. It included 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!

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