Implementation Example of Variable Pay

1. Variable Pay –
Implementation Example
- By Prof. Nagendra Saraf

2. Step 1 ::
Select a Position
• Role :: Customer Relationship Manager
• {Role not to be confused with Key
Accounts Manager}
• Industry :: Manufacturing

3. Step 2 ::
Understanding
of the Role
• Let’s first define who is a CRM…
• A Customer Relationship Manager is a person who
will act as a Single point of Contact for the Customer.
• The Duties of the CRM includes Building and
maintaining relationships with Customers and key
personnel within customer companies.
• Internal ::
• Aligning the Production Team and the
Implementation Team inline with the Goals of the
Customer.
• External ::
• Keeping Customers informed about the progress on
the Orders based on their Turn Around Time(s) {TAT}.
• Conduct Review Meetings and Collect Feedback from
Customers on a regular / random basis.
• Ensure Customers are Delighted by your products
and service offerings.

4. Step 3 ::
Detail the KRAs
1. Send introductory mails and then call and connect.
2. Mapping of existing customer profile and understand their
legacy, association and are there any unhandled previous
issues…
3. Come up with answers how to address these issues…
4. Make visits to Customer place and meet them in-person
5. Once, the Sales Team gets the Order, manage the Timelines
as specified by the Customer as well as Production Team…
6. Map when the Billing has to be done and when the
Payments to be collected.
7. Organize Cross Functional Team {CFT} Meetings.
8. Report the critical factors to Top Mgmt; weekly and in CFT
Meetings…
9. Keep Recordings of Issues Raised and Handled with the TAT…
10. Interact with Key Accounts Manager for upselling / cross
selling…
* For the sake of simplicity, I’ve listed just 10 of the KRAs

5. Step 4 ::
Segregate
Standard
and Critical Areas
• Standard ::
1. Send introductory mails and then call and connect.
2. Mapping of existing customer profile and understand their
legacy, association and are there any unhandled previous
issues…
3. Make visits to Customer place and meet them in-person
4. Once, the Sales Team gets the Order, manage the Timelines as
specified by the Customer as well as Production Team…
5. Map when the Billing has to be done and when the Payments
to be collected.
6. Interact with Key Accounts Manager for upselling / cross
selling…
• Critical ::
1. Come up with answers how to address the issues, if any…
2. Organize Cross Functional Team {CFT} Meetings.
3. Report the critical factors to Top Mgmt; weekly and in CFT
Meetings…
4. Keep Recordings of Issues Raised and Handled with the TAT…

6. Weekly Report Format::
PO
Number
/Date
WO
Number
Advance
Made
Pending
Payment
Delivery
Date
Commted.
% Completion
in Prod.
Despatch
Status
Implntation
Status
Billing
Status
Customer
Feedback

7. Issues Abstract Report

8. Step 5 ::
Roll out
• The Fixed Pay shall be given for completing all
the Standard Functions
• The above generally happens and there’s NO
resistance for completion.
• The Full-part of the Variable Pay shall be added
for completing all the Critical Functions
• So, in the Critical Functions, if function #2 is
NOT done; then we can define the Loss Of Pay
{LOP} as much as 50%
• Example :: If the Total Variable Pay component is
say, ‘X’ then the person will get only ‘X/2’ {provided
other Functions #1, 3 & 4 are met}.

9. Conclusion ::
• The implementation of Variable Pay rests on Two Crucial
Factors.
• First, Clear and Complete Definition of KRAs of every
Role in the Organization Structure.
• Second, Segregation of Critical Factors.
• Closing Remarks ::
• Initially for a couple of months, the HR/ Admin may
feel that the Salary Computation Process will take
more time…
• But, once the Process is Automated in accordance
with the Process Flows; you’ll see that the overall
performance of employees at all levels will start
increasing thereby boosting the organization
efficiency…
Write to me :: nagendra@wemanage.in