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Unit 12: Performance Management Linked Reward System

4. To use compensation as one of the critical motivators within the overall HRM Notes
strategy.
5. To attract and retain the best available talent in the industry.

6. To recognize, encourage and reward employees for good/exceptional performance.
7. To strengthen manufacturing and other processes and make them more predictable.
8. To prepare CG for future global competition.
Salient Features of CG’s PBC Schemes
The salient features of the PBC Schemes are:

1. Measurement of performance is on the basis of four specific elements: (1) cash, (ii)

profit before tax, (iii) sales and (iv) process cost.

2. Minimum and maximum compensation varies across levels.
3. The scheme takes into account the performance of the company, SBU, division and
individual. Weightage is assigned to performance at difference at different levels and
to different elements.

4. Less than 100% performance is also rewarded.
5. The scheme is made simple to the extent that an individual, at the end of the year, can
calculate his performance and the amount permissible to him.

6. The scheme encourages teamwork as it gives details of individual performance with
the division, SBU and company performance.
The ‘Pride Money’ Scheme
The PBC Scheme was termed as ‘Pride Money’ Scheme replacing the existing scheme of
bonus and commission.
The ‘Pride Money’ scheme was conceptually different from the loosely defi ned concept
of bonuses and commissions. Being scientific in nature and basically quantifi able, the

quantum of reward to executives was on the basis of performance of the company, SBU,
division and individual.

Such schemes are generally dynamic in nature and need to be periodically reviewed and
redesigned, based on the changes in the external and operating environment and to keep
in consonance with the organizational thrust areas.
Process of Setting Goals
Personal Goals
At the beginning of the year, the executive and the appraiser decide performance areas
and set mutually agreed goals to be achieved during the year. The process has an in-built
system of informal feedback to the executive by his superior. At the end of the year, the
appraiser evaluates the performance on the basis of achievement of goals.
Divisional Goals
The second step in the process is setting of Divisional goals through discussions between
the Divisional and Departmental heads. The divisional goals are set by the divisional head

in consultation with the departmental head. As a first step in the process, the departmental
head discusses departmental goals with Sectional heads.

Contd....

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