BONUSES DRIVING PERFORMANCE

Bonuses Driving Performance in Relevance to the Pay Model

Bonuses Driving Performance in Relevance to the Pay Model

Introduction

By March 2000's first quarter evaluation, it was evident that EUROCAP Equities Japan had performed beyond expectations. Its primary year-2000 objective was to become the top-choice broker for its client for Japanese equities. However, when bonuses were handed out in March for 1999's performance, two key research analysts threatened to resign and the team was overall dispirited, as bonuses were lower than expected and lower than industry payouts.

The Pay Model

Compensation systems are designed and managed to attain certain objectives in any company. The basic objectives include:-

• Efficiency

• Equity

• Compliance with laws and regulations

The efficiency objectives are:-

1. Improved performance, Increasing quality, Delighting customers

2. Controlling labor costs.

The equity objectives are:-

1. designing pay systems that recognize employee's contribution.

2. designing pay systems that recognize employee's need.

Equity is the fundamental to compensation system. The equity signifies that offering fair treatment to all the employees and offering a fair day pay for a fair's day work. Thus equity attempts to ensure fair treatment for all the participants.

The Compliance with rules and regulations:-

The compliance objectives are:

Conforming to the various central and state wage legislations and regulations.

But regarding these objectives the laws and regulations tend to be changing so the compensation system is adjusted according to it.

Fundamental objective of pay systems is defining what is fair is often difficult but we believe it is helpful to routinely question relative fairness of alternatives which does not mean that all employees will be treated equally but instead treated fairly or with justice in a given situation.

The strategic policies that form the foundation of compensation system:-

Every employer must address the policy decision shown on the left side of the pay:1. Internal consistency,2. External competitiveness, 3. Employee contribution 4. Administration of the pay system.

These strategic policies form the buildings blocks with regard to which the pay system is founded.

Pay under this Model should be set at rates necessary to recognize the individual's scientific contributions as well as the duties, responsibilities and complexity of the position. Salaries should be set not on the basis of the scientist's professional credentials alone or what he/she might command at other academic or private sector institutions, but rather at a rate that recognizes the nature of the scientist's NIH responsibilities and contributions.

The following criteria should be considered where applicable in establishing the initial pay level and ...