The Winning Edge

Compiled by: Chhaya Sehgal

CASE STUDY REVISED PERFORMANCE INCENTIVE DATAMATICS TECHNOLOGIES LTD

Proposed incentive structure for the BPO unit

For Production Teams and Team Leads as well as for the Marketing team
Background Old Case study
Introduction
It is a third party BPO unit which is into Non-voice, Data processing space. The company has
its major customers in USA and few others in Europe.
This company has different SBUs like Data processing, Content Management, Consulting
practice and F&A.
Company has its marketing offices in USA and UK. It has a delivery center in US too
Company provides offshore and onshore delivery models to its client

Company management is family controlled

Growth in top line and bottom line is flat for last 6-8 quarters and also facing attrition of
experienced staff due to this factor as well as emergence of competition within the industry
business
Company wants to come out with a motivating incentive plans for
(a) marketing team (b) production/delivery team
There are few projects where temp resources are also hired and hence need to put an attractive
incentive plan for them to keep them motivated for short duration projects
Incentive a tool of motivation
From the employees point of view, incentive programs are great because they receive recognition
and a tangible benefit. Incentive programs make the work environment fun and exciting. Productivity
increases and customer problems decreases as a result of a higher quality of service and support
Customers receive better customer service and are contacted more frequently when a sales incentive
program is in effect. This sets positive habits for the sales person and with their new level of
excellence they understand the value of customer service
Incentive programs with tangible, memorable rewards are proven employee motivators. They boost
sales, company morale, and build lasting bonds between employer and employees, customer and
partners
Good incentive plan help drive performance and deliver outstanding ROI for the company
To get most out of any incentive plan

Post daily results in location that can be seen by all performers

Daily feedback and payout can be weekly, monthly or biannually
To distinguish clearly from regular pay and incentive pay
To offer non-cash incentives. They are remembered longer than cash
To make sure that day to day management is positive
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The Winning Edge

Compiled by: Chhaya Sehgal

To evaluate effectiveness of incentive plan on performance, cost and employee satisfaction on a

regular basis
Introduction for US Tax project
It is a seasonal project starting from Nov07 and ending on Apr 15, 2008
Plan to process 30000+ individual tax returns with high quality for over 175+ CPA firms in US
Team of 500+ Temp resources to be put in place for this project
Two months of training on US Tax concepts, s/w and giving practice for preparing them for the live
tax season
We need to come up with and effective retention plan for them so that they are there with us
throughout the season and also to keep them motivated to do better quality work and meet the
turnaround time requirement
Emphasis on quality of return as 1 good return sent to customer will fetch 10 new returns and in turn
more volumes and revenue

Production Teams and Team Leads:

Targets
Returns/day Above Target
Preparer's Target
3
4
Reviewer's Target
9
10

Production Teams and Team Leads Rating Scales:

Exceeding Target
5
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The Winning Edge

Compiled by: Chhaya Sehgal

Production Teams and Team Leads Incentive Calculations

Incentive Amount
Rating
1
2
3
4
5
6
Total

Amount
%age of Resource
-60%
INR
250
20%
INR
350
10%
INR
600
5%
INR
750
3%
INR 1,000
2%
INR 2,950
100%

No. of Resource
194
65
32
16
10
6
324

Total
INR
INR
INR
INR
INR
INR
INR

Amount
16,200
11,340
9,720
7,290
6,480
51,030

Production Teams and Team Leads Financial impact

Financial Impact
Incentive for Resources

Amount/Week
For 6 Weeks
INR
51,030 INR 306,180

Projected incentive for Team Leads

For Season/Lead
INR
90,000

Total Amount given as Incentive

INR

396,180

Production Teams and Team Leads Revenue impact

Marketing team
To motivate the sales force to give their best shots at targets
To incentivise the sales team for managing client relationship and getting more and taking the service
to next levels
To create an environment of sense of ownership and of competition and in turn boost the sales of the
company
Different accelerators of incentives for new business brought and repeat orders brought in
To link the incentives to debtor realization as well as GM1 targets, market share
Incentive scheme should create an energized team where individual goals are also linked to certain
team and organization goals
To distribute the payouts in a timely manner; cash and non-cash; awards and public recognition and
acknowledgement of achievers
3

The Winning Edge

Compiled by: Chhaya Sehgal

System should be transparent and as simple as possible and should allow Individuals to measure their
reward to a certain extent
1.
2.
3.
4.
5.

Incentive % linked to the $ value of the contract signed or billing generated on volume basis
Incentive @5% for the new orders from new customers
Incentive @3% for the new orders from the existing customers
Incentive @1.5% for the repeat volume of orders from the existing customers
Incentive @10% and above for all deals of more than $5 million and/or annuity contracts of similar
values

NOTE: For Point # 4, i.e. giving incentive for repeat volume from existing customer, the thought behind this
idea is that Marketing guy maintains and nurtures the relationship with the customers and makes efforts to
retain them and increase volume from them
Disbursement parameters:
Disbursal of incentive on a quarterly basis and linked to the age of debtors
At least 75% of the GM1 targets and 60% of the top line targets to be met at the SBU level
Cash orders or realizations within 30 days would attract 0.50% additional incentive and these will
not be linked to top line or GM1 targets
If realization is not within 120 days of completion of delivery, the incentive amount to be held back
For consistently meeting targets on consecutive 4 quarters, an all expense paid trip with family to
Europe or US for >21 days
YOU ARE REQUIRED TO ANALYSE THE FOLLOWING:
1. Critically analyse the old incentive case study for its advantages and the flaws. Also comment on its
philosophy and the prevalent market and economy conditions when it was in operation.
2. Also analyse the attributes of xls sheet provided for the improvements aimed at the old incentive
scheme and comment to what extent the flaws in the old scheme were corrected by the revised
distribution of incentive through new formula in the xls sheet.
3. Now review the latest incentives proposed in this document and compare them with that of the old
scheme as well as the revised xls sheet. What improvements you observe in this proposal and
what changes in the market and economy conditions are indicated by the change in reward strategy
in this document?
4. Link this case study with the EVA based incentives chart provided to you earlier. Do the improved
and new incentives proposed from time to time are aimed at greater value creation for Datamatics.
If yes then explain how it has been achieved.
5. What conclusions do you draw from evolution of reward strategy in Datamatics over the years?