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STEELCO GUJARAT LTD Page No
HUMAN RESOURCE & ADMINISTRATION DEPARTMENT
DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE
Prepared by Reviewed by Issued by
Head : HR & Admin
HR Committee Managing Director
1. PREAMBLE :
The scheme shall be called “Annual Performance Linked Incentive Scheme”
for the Steelco executives. The main consideration while designing the
scheme are:
1.1 Quantum of Incentive should be enough to motivate the employees to
put extra efforts while at the same time ensuring the payments are
consistent in economic terms with the level of the performance.
1.2 The scheme should have the characteristics of Simplicity, Objectivity,
Smooth Operatibility and Amenability to unambiguous calculations..
2. OBJECTIVE:
The Annual Performance Linked Incentive (APLI) is defined as the variable
part of the pay which is awarded each year depending on the performance.
APLI scheme is applied at the individual Executive employee level
The main objective of this scheme is to promote Motivation, Moral and foster
Team spirit among the employees. Besides boosting their performance related
towards the business objectives set by the top management. To qualify for the
APLI, the executive must achieve excellence in the delivery of services and
STEELCO GUJARAT LTD Page No
HUMAN RESOURCE & ADMINISTRATION DEPARTMENT
DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE
Prepared by Reviewed by Issued by
Head : HR & Admin
HR Committee Managing Director
other performance commitments as defined under his / her personal “ Key
Performance Indicators / Key Responsibility Area” matrix.
3. SCOPE:
Annual Performance Linked Insensitive scheme shall cover all executives
(other than Staff & Workmen, Trainees / Apprentices) of the Steelco Gujarat
Ltd. The benefit under the scheme, shall be payable to the employees who are
on the rolls of the company during the year under review provided he/she has
worked for not less than six months in that year. However, the payment will be
made on pro – rata basis to such candidates.
4. POLICY YEAR:
The computing of Annual Performance Linked Incentives will be based on the
Financial Year i.e. from 01st April to 31st March.
5. METHOD:
The personal performance is not only measured in terms of specific KPI, but
also in terms of achieving desired goals and outcomes covering his / her area
of responsibilities. Performance is effective service delivery and
responsiveness to stakeholders. It is the shift from inputs – process emphasis
(efficiency) to results and outcomes (effectiveness).
STEELCO GUJARAT LTD Page No
HUMAN RESOURCE & ADMINISTRATION DEPARTMENT
DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE
Prepared by Reviewed by Issued by
Head : HR & Admin
HR Committee Managing Director
The proposed methodology for the APLI consists of the following steps :
STEP – 1: Select Key Departmental Objectives
Objectives represent the development requirements to be achieved by the
department in a particular set of policies and programs over a specific period
of time (short – medium- long) . Individual objectives should be linked and
derived from the Departmental Vision and Mission statement.
STEP – 2: Assign Relative Weights to Objectives
Objectives in the Performance Management system should be ranked on
priority according to the degree of significance and specific weights should be
attached to these objectives. All weights must add to 100.
STEP – 3: Specify Means for Achieving Objectives
For each objectives, the department must specify the required actions
(Policies, Programs, Schemes & Projects) to achieve the objective.
STEP – 4: Specify Success Indicators
For each of the means specified in Step 3, we must specify one or more
success indicators or key Performance Indicators (KPIs) Success indicators
are important management tools for driving improvements in departmental
performance.
STEELCO GUJARAT LTD Page No
HUMAN RESOURCE & ADMINISTRATION DEPARTMENT
DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE
Prepared by Reviewed by Issued by
Head : HR & Admin
HR Committee Managing Director
The KPI should represent the main business of Steelco and should also aid
accountability. The weight assigned to a particular objective should be spread
across the relevant success indicators.
STEP – 5: Specify Targets for success Indicators
The next step is to choose a target for each success indicator. In setting
targets, we should consider the best mix of volume, quality, efficiency,
financial performance and customer (Internal / External) service targets given
their priorities.. A good set of targets can balance the pursuit of improved
service delivery with the need to provide value for money.
Targets are tools for driving personal performance improvements. Target
levels should, therefore, contain an element of stretch and ambition. However,
they must also be achievable. The target should be presented as the following
FIVE POINT scale:
Parameter Excellent (5) Very Good
(4)
Good (3) Fair /
Average (2)
Poor (1)
Target* 110 100 75 50 25
(Note: Target figures are given as example only)
STEELCO GUJARAT LTD Page No
HUMAN RESOURCE & ADMINISTRATION DEPARTMENT
DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE
Prepared by Reviewed by Issued by
Head : HR & Admin
HR Committee Managing Director
6. PERIODICITY OF PAYMENT
As nomenclature suggest, Annual Performance Linked Incentive (APLI) shall be
calculated once in a year, i.e. after the end of financial year. Financial year shall
be the year of evaluation and is deemed as period from 01st April to 31st March.
7. GENERAL CONDITIONS
The amount of APLI earnings will neither be termed as pay nor allowance, nor
wages. Accordingly, this amount would not count for any service benefits (PF,
Gratuity, etc.). The figure of achievement and other record as maintained by the
management shall be final and binding to all.
The scheme may be reviewed, if required, and the management has a right to
revise performance parameters, tables, eligibility criterion, payment criterion, etc.
appearing in the scheme, as appropriate.
In case of any ambiguity in defining and explaining the provisions of the scheme,
the matter shall be referred to the Managing Director only. The management
reserve the right of shutting down Annual Performance Linked Incentive Scheme
for reasons beyond its control.
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