Page 144 - DMGT517_PERFORMANCE_MANAGEMENT_SYSTEM

Unit 12: Performance Management Linked Reward System

1. Individual Employees: Individuals showing exceptional behaviour and high performance Notes
should be rewarded. Individuals are being rewarded by all organizations that follow a
reward system. Variable pay is one type of reward. We shall discuss below individual
rewards under other aspects of reward system. Probably about 20% managers are likely to
get rewards.

Example: Performance at Polaris is categorized into four levels: Premium,
th
Outstanding, Competent and Learning. These are indexed to the 90 , 75 , 50 and 25
th
th
th
percentile. “The Premium Performers are at the top end of the industry, and that is
consistent with our policy of institutionalizing meritocracy at all levels of the company.”
Among the rewards schemes at Polaris are Konark, aimed at identifying potential leaders

and encouraging the “cream to float to the top”.
Example: At Cognizant “statistically speaking, the top performers have
progressed about 70 percent quicker, and have received cash award up to three times
higher than the others in the organization. That pretty much sums up our performance
ethic.”
2. Teams: As already stated, individuals work in teams, and the organizations need strong,
cohesive, competent and self managed teams. Therefore, in future more and more rewards
should be given to teams. Teams need to be empowered by giving high performing teams
more autonomy and resources.

Example: In Tata Cummins, which runs operations through self managed
teams of workers, each team is given money every month to use for raising the level of
performance. Teams also include departments. High performing department should also
be recognized and rewarded.

3. The Organization: Exceptional performance by the organization needs to be celebrated.
Every one belonging to the organization then has a sense of pride.
4. Outsiders: Customers, suppliers vendors etc. can also be covered in the reward system.

Example: In Associated Capsules and Universal Capsules, outstanding
employees chosen are asked to name any outsider, who in their opinion, has contributed
to the business of the company in the last quarter. They may invite that person to the
company’s dinner and the Chairman writes the invitation letter to such persons. This is a
very innovative way to recognizing external persons through internal people.

Example: At ICICI recognition extends to the employees’ family as well:
employees’ children who excel in academics or extracurricular activities are recognized
through scholarships and sponsorships.

12.4.2 What to Reward?

As already stated rewards are meant to reinforce desirable behaviour, high performance, values
etc., whatever the organisation wants to be strengthened and promoted further. Some of the
following aspects can be rewarded.

1. Performance: Performance needs to be rewarded, both of individuals and teams. Criteria
of performance excellence and their weightage may be determined. The following criteria
and weightage are suggested as an illustration.

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