How to Run Multiple Compensation Plans using Performance Management Solution?

Carrot and Stick model is lost its relevance in contemporary times. The employers are shifting towards fair compensation models as the employee life cycles are shortened. Moreover, the variations in work profiles of an employee differ from case to case. Monitoring all the aspects for every single employee in the company is not feasible or sustainable, either owing to the complexity and the little value delivered against the cost incurred. On the retrospective note, the employees are considering the fact that their remuneration shall be in accordance with the productive output they provide in accordance to company’s requirements and narrowing our subject to discuss multiple compensation plans with the help of automation as per the provision of the user. These Performance Management Solutions have a high degree of configurable parameters to develop a customized pay structure. 

Decoding the Reasons Behind the Requirement of Different Pay Structures with a Stochastic Analysis

If an employer inducts two employees for various positions, the outcome expected out of them is naturally in an entirely different direction. Employee A is a clerk having an average compensation package of Rs. 12000 in the market with adequate individuals available for the profile. On the contrary, employee B has the same salary, but the increase in their competency and scarcity will lead to more extensive hikes and more concentrated efforts for employee engagement and retention. The cost of HR turnover varies by a vast difference and compensating them with the same criteria will lead to grave mismanagement of funds. Instead, evaluating the performance with relevant benchmarks such as productivity with respect to profitability, consistent and error-less execution of work, and relevance to the employer will help the better assessment. A Performance Management System can help in the configuration of the KRA and KPI indices. Have a look at the article to see how you can club Performance software with different compensation structures:

Fixed bracket-wise Remuneration

Typically in the manufacturing sector, the working hours constitute the major remuneration factor as the skill set required is technical in nature, and moderate innovation is needed. They are entitled to receive a salary as per the networking hours. This is because of the fact that the quantity of goods produced is directly proportional to the time spent due to the monotonous profile. But overworking needs to be checked too along with the additional workloads in the peak seasons. The fixed bracket-wise remuneration will make calculations simple for both employees and employers. The quality of the goods produced is checked through sampling plans and rejection ratio, which act as remuneration factors.

Target Delivery Based Compensation 

Sales associates in specific sectors are paid as per the target achievement. They do not have a fixed payout system, and the payment is made solely as per the commission plan. It is comprised of slabs that are involved of percentage profit-sharing schemes where higher sales reflect better earnings. The MTD and YTD figures are also clubbed with occasional schemes linked with foreign trips and gift vouchers. There is no provision for fixed payment; however, the requirement for traveling allowance can be provided after reaching a particular level.

Hybrid Pay Structure Scenario

This is one of the most common structures in the market where the staff member is provided with a fixed portion and a variable portion of their salary based on the performance. Their daily reporting will be converted in the KRA and KPI indices to form the variable part. This will require definite, objective, and measurable output, along with the time allocated by the employee. The performance management systems will interpret the payout as per the performance and steady salary to generate the net payable amount. This is applicable to a wide range of clerical, executive, and leadership roles.

Freelancer Work Process Management with slab-wise Payment

The freelance economy is on the rise and accommodating casual labor is equally essential. Their performance is monitored to get comprehensive data of the work and what parameters affect the work. This will help in improving the company’s understanding of the work profile and the nature of complexity. The realistic data will help in establishing fair compensation policy for the concerned freelancer. Regular employees can also be included in this scheme when the additional workload is allocated to them. The working quantity and delivery rates are also improved with further incentivization of these traits. 

What is the Core Benefit of Such Solutions for the Users

All of these compensation models are based on diverse requirements, but all of them can be managed on a single platform. This eases a lot of problems for the companies as the statutory compliances are appropriately handled and the entire staff is included under some standard rules and regulations as per the company policy. The emphasis on centralization of performance evaluation. Methodical analysis upholds the transparency, accountability, and fair practices turning it into a joint stake partnership for the employers and their staff members.

Source: https://factohr.com/performance-management-software/

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shylee Joined: September 20th, 2019