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Rewards management

Design of Variable Pay Plan for broking firm in Mumbai

The challenge:

Managing costs for one of Mumbai’s leading broking firms during the economic downturn. Out client found staying afloat during slowing growth and high inflation taxing even after various cost management measures; they sought our help in reducing personnel costs with the introduction of a robust performance management system and sharper target parameters. We also instituted a Performance Linked Variable Pay Plan (PLVP) linked to business and individual achievement parameters. The biggest hurdle was getting employee buy in, since the performance payout was a portion of the current salary, meaning a reduction in monthly take home pay. 

 

Our Approach:

Based on our market experience, industry knowledge and benchmarks, we conducted a detailed analysis of the company’s department-wise budget. Precipitated on this, Cerebrus designed the qualifiers and introduced a PLVP was linked to achievement of Performance Goal. Different schemes were designed to cater to the needs of various businesses. After meetings with key role holders, we redefined measurable Key Result Areas (KRAs) for critical positions with clearer definitions of performance parameters, linked to the payout. We did allow for an opportunity to earn extra in case critical role holders over achieved their performance targets. 

Since buy-ins were crucial, we partnered with the company’s HR team to get approval for the scheme from all key stakeholders. Communication sessions were conducted with each identified role to address anxieties and manage emotions in this sensitive situation. We also worked with HR to implement the systems and process templates we created to calculate performance payouts in a structured, transparent manner, whether quarterly, biannually or annually. 

 

The resolution:

With the new performance management system and the variable pay plan designed specific to each business, the company saw a reduction of nearly 10 percent in personnel cost. By driving a performance culture, the company was not only able to achieve the key objective of managing costs, it also defined transparent performance goals and embraced stringent performance parameters.