The HR manager has proposed a new incentive plan to replace the current performance appraisal plan. The new plan would increase the variable pay component of executive compensation to 50% of total pay, up from 20-30%, with pay linked to both company and individual performance. A survey found that 30% of marketing employees feel underpaid, 50% feel their pay is competitive, and 20% feel overpaid based on market benchmarks. The proposed plan would provide marketing executives an incentive bonus based on reducing the marketing sales ratio between a base period and assessment period. The HR manager believes this plan will not only optimize compensation but also foster teamwork among marketing executives.
The HR manager has proposed a new incentive plan to replace the current performance appraisal plan. The new plan would increase the variable pay component of executive compensation to 50% of total pay, up from 20-30%, with pay linked to both company and individual performance. A survey found that 30% of marketing employees feel underpaid, 50% feel their pay is competitive, and 20% feel overpaid based on market benchmarks. The proposed plan would provide marketing executives an incentive bonus based on reducing the marketing sales ratio between a base period and assessment period. The HR manager believes this plan will not only optimize compensation but also foster teamwork among marketing executives.
The HR manager has proposed a new incentive plan to replace the current performance appraisal plan. The new plan would increase the variable pay component of executive compensation to 50% of total pay, up from 20-30%, with pay linked to both company and individual performance. A survey found that 30% of marketing employees feel underpaid, 50% feel their pay is competitive, and 20% feel overpaid based on market benchmarks. The proposed plan would provide marketing executives an incentive bonus based on reducing the marketing sales ratio between a base period and assessment period. The HR manager believes this plan will not only optimize compensation but also foster teamwork among marketing executives.
Imagine you are CEO of the bank critically review the proposal of
HR manager and comment whether this proposed incentive plan
would really ensure motivation and increased retention.
The HR manager have prepared the new incentive plan as their
current performance appraisal plan was critically evaluated. As per that variable pay component in executive compensation in India to almost 50% from 20-30%. And that too without linking to company performance alone. It is linked to companys performance and individual performance.
The benchmark annual salary data in comparable private sector
in the country for marketing executives is of Rs. 6Lakhs while organization pays today pays 6.25 Lakhs also the calculated annual cost is 20%.
Also the survey carried out by HR department indicate that 30%
of marketing employees feel they are underpaid 50% of employees feel they are getting competitive benchmark salary and remaining 20% feel that they are getting more than market rate.
As per new plan an incentive bonus will be payable to marketing
executives based on performance reduction in marketing sales ratio comparing base period and assessment period.
The HR manager believes the following plan will not ensure
optimization of compensation of marketing executives but foster teamwork.