Dear Members, We are into strategic distribution management and want to pay incentives with salary to our support staff like admin/ finance and operation.
I wanted to know that is there any basic rule for paying incentives. Do we have to draft a policy in writing before start paying?
Thanks
Atul
I wanted to know that is there any basic rule for paying incentives. Do we have to draft a policy in writing before start paying?
Thanks
Atul
Dear Atul K Verma,
The definition of incentive is "an additional payment (or other remuneration) to employees as a means of increasing output". So while designing a policy, you need to decide first, who is eligible for the incentives, the parameters of the eligibility, who will maintain the records for the output, how will it be maintained, the method of calculation of the incentive and how the disbursement of the incentives will take place. The policy must be communicated well in advance.
By giving the additional output, the employees bring additional revenue to the company and so an additional profit. As a motivational gesture and also a tribute to hard work, the companies share a percentage of the profit with those who brought additional profit. This is called an incentive.
While deciding the parameters of eligibility, you need to identify the fixed output that an employee anyway has to give. If the employee gives output over and above the regular target, he/she becomes eligible to get an incentive.
Once the policy is designed, its meticulous implementation is also important. Occasionally the companies delay the disbursement of the incentive or even skip the payment itself. The non-adherence of the policy kills the spirit of the incentive and the employees develop distrust against the top leadership.
Otherwise, I have seen a few companies keeping the regular target at such a high level and attaining it itself becomes a challenge. In such a case, getting the incentive becomes a far cry for the employees. Such crafty artfulness if avoided, the better!
Thanks,
Dinesh Divekar
From India, Bangalore
7736The definition of incentive is "an additional payment (or other remuneration) to employees as a means of increasing output". So while designing a policy, you need to decide first, who is eligible for the incentives, the parameters of the eligibility, who will maintain the records for the output, how will it be maintained, the method of calculation of the incentive and how the disbursement of the incentives will take place. The policy must be communicated well in advance.
By giving the additional output, the employees bring additional revenue to the company and so an additional profit. As a motivational gesture and also a tribute to hard work, the companies share a percentage of the profit with those who brought additional profit. This is called an incentive.
While deciding the parameters of eligibility, you need to identify the fixed output that an employee anyway has to give. If the employee gives output over and above the regular target, he/she becomes eligible to get an incentive.
Once the policy is designed, its meticulous implementation is also important. Occasionally the companies delay the disbursement of the incentive or even skip the payment itself. The non-adherence of the policy kills the spirit of the incentive and the employees develop distrust against the top leadership.
Otherwise, I have seen a few companies keeping the regular target at such a high level and attaining it itself becomes a challenge. In such a case, getting the incentive becomes a far cry for the employees. Such crafty artfulness if avoided, the better!
Thanks,
Dinesh Divekar
From India, Bangalore
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