Hi Friends
Was wondering if any of you can help with this constant struggle that I have when it comes to deciding how much to MBO bonus to pay on achieving targets.
Our company has an MBO incentive programme where if x is your incentive then 50% of x is based on your performance and 50% on company's performance. Since we are a start-up, we have decided not to give the company's incentive to people this time
So we are left with 50% of x. Acc. to the Mgmt. we should pay as given below:
1 (superior performance) = 100%
2 (consistently exceeding targets) = 80%
3 (meeting targets) = 60%
4 (not meeting targets) = 40%
5 (poor performance) = 0%
Want you to share with me your thoughts on the above. Also, is there any statistics (data from IT industry) that can support this or any other way to give this incentive.
According me, getting 60% of 50% of my incentive on achieving targets would be a de-motivator.
Waiting for your inputs.
Regards
Jeena
From India, Bangalore
Was wondering if any of you can help with this constant struggle that I have when it comes to deciding how much to MBO bonus to pay on achieving targets.
Our company has an MBO incentive programme where if x is your incentive then 50% of x is based on your performance and 50% on company's performance. Since we are a start-up, we have decided not to give the company's incentive to people this time
So we are left with 50% of x. Acc. to the Mgmt. we should pay as given below:
1 (superior performance) = 100%
2 (consistently exceeding targets) = 80%
3 (meeting targets) = 60%
4 (not meeting targets) = 40%
5 (poor performance) = 0%
Want you to share with me your thoughts on the above. Also, is there any statistics (data from IT industry) that can support this or any other way to give this incentive.
According me, getting 60% of 50% of my incentive on achieving targets would be a de-motivator.
Waiting for your inputs.
Regards
Jeena
From India, Bangalore
Hi Jeena,
Am not from IT industry as such to share the data on incentive payout..
So what it is a start up ?..surely one can award them as their performance would determine the financial results..
On the paper it looks very good however what needs to be assessed is the linking of the goals to the Organizational goals. The above standards needs to be cleary defined. For instance how does one define "Superior Performance"..what are the metrics associated with it ?
Secondly, one can consider paying them on the basis like :-
Sales :
If they achieve Rs ---- sales value with the Net Margin of Rs ---, then they would be entitled to the incentive of Rs 2 Lacs as bonus payout.
However if one achieves 90% & 100 % of Net Margin target..then -- % of Incentive alternative if one exceeds the target, he/she is entitled to additional pro-rata % of the incentive payout.
Thirdly, one can consider the similar options with various categories with % weightage.
Hope this helps.. :D
Cheers,
Rajat Joshi
From India, Pune
101Am not from IT industry as such to share the data on incentive payout..
So what it is a start up ?..surely one can award them as their performance would determine the financial results..
On the paper it looks very good however what needs to be assessed is the linking of the goals to the Organizational goals. The above standards needs to be cleary defined. For instance how does one define "Superior Performance"..what are the metrics associated with it ?
Secondly, one can consider paying them on the basis like :-
Sales :
If they achieve Rs ---- sales value with the Net Margin of Rs ---, then they would be entitled to the incentive of Rs 2 Lacs as bonus payout.
However if one achieves 90% & 100 % of Net Margin target..then -- % of Incentive alternative if one exceeds the target, he/she is entitled to additional pro-rata % of the incentive payout.
Thirdly, one can consider the similar options with various categories with % weightage.
Hope this helps.. :D
Cheers,
Rajat Joshi
From India, Pune
Hi Rajat
Thanks for your inputs. Dont have any problem when it comes to the Sales guys...they have a different incentive programme.
My problem is when it comes to the techies.
1) Almost impossible to set measurable targets
2) 60% of 50% of your bonus on achieving your targets doesnt sound motivating to this bunch. Let's say your bonus is Rs.100/- so you are assesed for 50% of this since the other 50% is based on company;s performance. 60% of Rs. 50/- is Rs.30/- So essential if you slog all year and meet your targets you get only Rs.30/- from the Rs.100/- that is there.
3) Management wants data from similar companies to pay more for achieving goals. So all arguements that this is not a good incentive scheme, on the contrary may prove to be a demotivator.....ends there coz of lack of data to support the arguement.
Looking forward to more inputs.
regards
Jeena
From India, Bangalore
Thanks for your inputs. Dont have any problem when it comes to the Sales guys...they have a different incentive programme.
My problem is when it comes to the techies.
1) Almost impossible to set measurable targets
2) 60% of 50% of your bonus on achieving your targets doesnt sound motivating to this bunch. Let's say your bonus is Rs.100/- so you are assesed for 50% of this since the other 50% is based on company;s performance. 60% of Rs. 50/- is Rs.30/- So essential if you slog all year and meet your targets you get only Rs.30/- from the Rs.100/- that is there.
3) Management wants data from similar companies to pay more for achieving goals. So all arguements that this is not a good incentive scheme, on the contrary may prove to be a demotivator.....ends there coz of lack of data to support the arguement.
Looking forward to more inputs.
regards
Jeena
From India, Bangalore
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