Variable Pay Policy

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Variable Pay Policy – Oct 1st – Mar 31st FY’15 (H2)
HR-PO162I, Issue 6.0
Sharda Centre, Off Karve Road, Erandwane,
Pune, Maharashtra, India 411004
www.techmahindra.com
Company-Confidential
VARIABLE PAY POLICY
TABLE OF CONTENTS
1.
OBJECTIVE........................................................................................................................................... 3
2.
SCOPE .................................................................................................................................................... 3
3.
ACRONYMS .......................................................................................................................................... 3
4.
VARIABLE PAY FRAMEWORK ........................................................................................................ 3
5.
VARIABLE PAY % ............................................................................................................................... 4
6.
VARIABLE PAY PARAMETERS AND PAYOUT PERIODS ............................................................ 4
7.
UNIT & ORG PERFORMANCE AND MULTIPLIER PERCENTAGE............................................. 6
FORMULA FOR PAYOUT BASED ON UNIT ACHIEVEMENT .................................................................... 7
8.
VARIABLE PAY PAYOUTS................................................................................................................. 7
9.
ANNEXURE ........................................................................................................................................... 8
10.
SEPARATION GUIDELINES ............................................................................................................... 9
11.
POLICY AMENDMENTS ................................................................................................................... 10
12.
DOCUMENT HISTORY...................................................................................................................... 10
HR-PO162I 6.0
Business Management System
Page 2 of 11
Company-Confidential
1.
VARIABLE PAY POLICY
OBJECTIVE
The key purpose of this policy is to establish a performance based framework that promotes high
performance and clear role based links to unit, business and organization objectives.
2.
SCOPE
The policy is applicable to all IT associates from Tech Mahindra working on rolls of the organization and
spread across locations (including subsidiary companies) having variable pay as a component in their
compensation structure.
This policy excludes associates:




3.
Who do not have variable pay as a component in their salary structure
Who are covered under different incentive plans such as Sales Incentive Policy, Target
Incentive, Performance Bonus, BSG Incentive Plans and any other incentive plan unless
specified otherwise
Associates working in entities that are not covered will not be eligible
Working on contract, retainer-ship and any other forms of employment other than regular
ACRONYMS
Acronym
Explanation
Human Resources
Compensation & Benefits
Integrated Business Unit
Competency Delivery / Solutions Unit
Talent Management Group
Resource Management Group
Project Management Office
Designated Non Billable
Competency Support Group
Earnings Before Interest, Taxes, depreciation and
amortization
Associate delight Index
Customer Satisfaction
Execution Excellence Index
Capability Building
Quality Management Group
Customer Centricity Office
HR
C&B
IBU
CDU / CSU
TMG
RMG
PMO
DNB
CSG
EBITDA
ADI
CSAT
EEI
CB
QMG
CCO
4.
VARIABLE PAY FRAMEWORK
The variable policy framework encompasses parameters centered around the Balance Score Card
(BSC) approach typically comprising individual, unit and organization level parameters as relevant to
associates based on their roles. Weightages are assigned to each parameter depending on the
criticality and business focus. The variable pay linked to each of these parameters will be paid based on
the achievement for the applicable time period.
HR-PO162I 6.0
Business Management System
Page 3 of 11
VARIABLE PAY POLICY
Company-Confidential
The list of typical parameters and metrics of measurement is mentioned under each category as
applicable to the associate.




5.
Billability / Billable Efforts (Project Allocation)
Individual Performance Rating
Business Unit Level Performance - Integrated Business Unit/Competency Unit per organization
structure / as specified
Organization (Org) Level Performance
VARIABLE PAY %
Below is the Sub-Band-wise on-target variable pay as % of Gross Salary (excl. Gratuity and Insurance)
Sub-Bands
Up to U4
P1
P2
E1 & above
Note:


6.
Offshore VP % of CTC
10%
20%
25%
30%
Onsite VP % on CTC
3%
6%
8%
10%
Variable Pay % mentioned above is the maximum permissible % of Gross Cash Compensation
Existing associates may continue to have a different % of variable pay till the time suitably
adjusted through salary revision process (includes associates on-boarded with differing
percentages as agreed during transfer/hiring process of merger/acquisition/ re-badging and
similar such movements.)
VARIABLE PAY PARAMETERS AND PAYOUT PERIODS
Revenue Enablers
Sub-Bands
U1 to P1
P2 to E1
E2 and above


Billable
Efforts/Project
Allocation
100%
75%
NIL
Unit Performance
(IBU/CU)
Org Performance
NIL
25%
90%
NIL
NIL
10%
Revenue Enablers are associates who are being billed for their efforts
Payout will be on a monthly basis for billable efforts’ based component and on a quarterly basis
for Unit / Org Performance
Payout % & Multiplier Table
Billable
Sub-Category
Customer Projects & Internal Projects*
Business Wait (BW) Days
Multiplier
Payout %
<=85%
90%
>85%
0 – 30 days
100%
90%
31– 60 days
80%
61 – 90 days
60%
> 90 Days
0%
Note: * Internal projects should be approved by Investment committee appointed by the CEO and
should have assigned project IDs.
HR-PO162I 6.0
Business Management System
Page 4 of 11
VARIABLE PAY POLICY
Company-Confidential
For associates on Business Wait, the percentages shown would apply for both the individual and the
Unit / Org performance components.
Designated Non Billable Associates




Sub-Bands
Performance Rating
U1 to P1
P2 to E1
E2 and above
100%
75%
NIL
Unit Performance
(IBU/CU)
NIL
25%
90%
Org Performance
NIL
NIL
10%
DNB as defined by Resource Management Group is Designated Non Billable and includes
Solution Architect, Alliance Mgmt, Ops Mgmt, Pre sales, PMO, Unit Support, Competency
Head, Delivery Head, Sales Support, SBO. Parameters for associates in DNB would be IBU
Performance up to Sub-Band E1.
Based entirely on performance rating for Sub-Band U1 to P1 and on both performance rating
and Unit performance for Sub-Band P2 to E1.
Based on Unit and Org performance for Sub-Band E2 & Above
Payout will be on a monthly basis for associates in Sub-Bands U1 to P1 and on a quarterly
basis for associates in Sub-Band P2 and above.
Individual Rating based %
DNB
Rating
S
M
A
R&T
Payout % Guideline
100%
85%
75%
0
Note: Annual Performance Ratings are as defined in Performance Management Systems
 Payout will be recalibrated by C&B based on average payout for Revenue Enablers in similar
sub-bands at the end of each month for Band U1 to P1 and quarterly for Band P2 to E1,
aligned to payout % guidelines.
Support Associates
Sub-Bands
U1 to P1
P2 to E1
E2 and above



Performance Rating
100%
100%
90%
Unit Performance
(IBU/CU)
NIL
NIL
NIL
Org Performance
NIL
NIL
10%
Support includes Executive Assistants, Technical Support and all other support functions;
excludes Sales & Marketing
Payout % is based on performance rating for up to Sub-Band E1 and for Sub-Band E2 & Above
based both on performance rating and Org performance
Payout will be on a monthly basis for associates in Sub-Bands U1 to P1 and on a quarterly
basis for associates Sub-Band P2 and above
HR-PO162I 6.0
Business Management System
Page 5 of 11
VARIABLE PAY POLICY
Company-Confidential
Individual Rating based %
Support
Rating
S
Payout % Guideline
M
85%
A
75%
R&T
0
100%
Note: Annual Performance Ratings are as defined in Performance Management Systems
 Payout will be recalibrated by C&B based on average payout for Revenue Enablers in similar
sub-bands at the end of each month for Sub-Bands U1 to P1 and quarterly for Band P2 to E1,
aligned to payout % guidelines.
Note: - all classifications cited above are as defined by the Resource Management Group
7.
Unit & Org Performance and Multiplier Percentage
REVENUE FACTOR
Business Units
Weightage
Achievement %
>120%
>105% <=120%
>95% <=105%
>88% <=95%
>86% <=88%
>=82.5% <=86%
<82.5%
All
Busine
ss
Units
35%
EBITDA FACTOR
CSG
Vertical
CSG Solutions /
EBS
Cloud /
TVG
30%
30%
Multiplier
1.3
1.2
1.1
1
0.85
0.5
0
Business Units
Weightage
Achievement %
>=110%
>=100% <110%
>=95% <100%
>=90% <95%
>=80% <90%
<80%
Business Units
Weightage
Achievement %
>=120%
>=105% <120%
>= 95% <105%
>=80% <95%
>=60% <80%
>=50% <60%
<50%
HR-PO162I 6.0
CSG –
EBS
NA
CSG
Vertical
Solutions /
Cloud /
TVG
30%
Multiplier
1.2
1.1
1.00
0.90
0.75
0.6
0
Business
Units
Weightage
Score
>=2.0
>=1.8 <2.0
>=1.6 <1.8
>=1.4 <1.6
<1.4
Business Management System
CSG EBS
35%
30%
Multiplier
1.1
1
0.90
0.80
0.60
0
EEI
FACTOR
REVENUE - NEW SOLUTIONS
All
Busin
ess
Units
All
Business
Units
All
Business
Units
10%
1.10
1.00
0.80
0.60
0.00
CSG
Vertical
Solutions
/ Cloud /
TVG
NA
CAPABILITY
BUILDING FACTOR
CSG
Vertical
CSG Solutions /
EBS
Cloud /
TVG
20%
20%
Multiplier
1.10
1.00
0.80
0.60
0.00
Page 6 of 11
VARIABLE PAY POLICY
Company-Confidential
Business
Units
Weightage
ADI
All
Business
Units
CSG EBS
10%
CSG
Vertical
Solutions /
Cloud /
TVG
Business
Units
Weightage
CSAT
All
Business
Units
CSG EBS
CSG
Vertical
Solutions
/ Cloud /
TVG
10%
Score
Multiplier
Score
Multiplier
>3.80
1.00
>=4.3
1.10
>3.60 <=3.80
0.90
>=4.0 <4.30
1.00
>3.50 <=3.60
0.75
>=3.7 <4.00
0.80
>3.40 <=3.5
0.50
>=3.5 <3.70
0.60
<=3.4
0.00
<3.5
0.00
Note:
 For Employee Class “Sales Support”, Unit performance will be computed based on, Revenue –
weightage 35%, EBITDA – weightage 35%, ADI – weightage 10%, CSat – weightage 20%
Revenue and EBITDA will carry a weight of 50% each when considered for org level
performance The multipliers considered will be as given above.

Variable Pay Payout % when considered for Unit level performance will be computed based on
the weightage assigned to each parameter. Targets will be based on BSCs for the applicable
unit.
 Revenue and EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)
achievements will be as reported by finance
 Associate Satisfaction (ADI) will be based on the last survey by the HR Team
 Customer Satisfaction (CSat) will be based on the last survey done by the CCO Team / Quality
Team as applicable. In the event the CSat score from the unit is not available, then the
eligibility under this parameter would be “0”.
 Execution Excellence Index (EEI) will be based on the last survey done by the Quality group.
 Capability Building (CB) would be specific to unit BSC
Formula for Payout based on Unit Achievement

(Weightage x Revenue Factor based on revenue achievement against target) + (Weightage x
EBITDA Factor based on EBITDA achievement against target) + (Weightage x CSat Factor
based on applicable score) + (Weightage x ADI Factor based on applicable score) +
(Weightage x EEI factor based on level achieved or CB factor based on level achieved)
Formula for Payout based on Unit Achievement
 (50% x Revenue Factor based on revenue achievement against target) + (50% x EBITDA
Factor based on EBITDA achievement against target)
8.
VARIABLE PAY PAYOUTS
8.1.
For all associates, 60% advance payout shall be paid out on a monthly basis. Reconciled /
Balance payout (if any) shall be processed with next month’s payroll for Sub-Bands U1 to
P1 and as applicable for Sub-Band P2 to E3.
8.2.
For associates in Sub-Band P2 to E3, reconciliation of variable against performance rating /
billable efforts (Project Allocation) / IBU / Org parameters for applicable category shall
happen on a quarterly basis and balance payout (if any) shall be processed within 90 days
after closure of the quarter.
HR-PO162I 6.0
Business Management System
Page 7 of 11
VARIABLE PAY POLICY
Company-Confidential
8.3.
For associates at onsite, payout processing will be in the monthly/bi-weekly payroll
succeeding offshore payroll.
8.4.
Balance Variable Pay (as per applicable payout frequency) shall be paid only if the
associate is on rolls (including resigned status) as on actual payout date.
8.5.
Associates, who have been transferred to group companies, shall receive payouts as per
receiving company’s policy and timelines.
8.6.
In the event of role changes during the respective Quarter / Month (e.g.:-from billable to
DNB) the weighted average of the multiplier for respective durations in each role/category
would be computed and applied.
8.7.
Targets and achievements will be on a cumulative basis till Q4 for IBU/CU/Org.
8.8.
New Joiners:
8.9.
8.8.1
All associates who are new would be eligible for 75% payouts for the first 2
months after date of joining (DOJ).
8.8.2
An interim rating will be awarded to all associates in DNB/Support category post
completion of 2 months and the final payout will be 75% or rating based payout
whichever is higher for individual rating based component.
8.8.3
For associates who are Revenue Enablers, payout will be 75% or based on
billable efforts/Project Allocation whichever is higher.
This will not be applicable for those associates being provided service continuity in the event
of a transfer.
8.10. Training Period:
8.10.1 All technical associates who joined through Campus shall receive 75% of target
variable for the initial 6 months of training after date of joining (DOJ). If the
associate is allocated earlier, then the final payout will be 75% or as per billable
efforts whichever is higher. Reconciliations will be effected in the following month.
8.10.2 For Trainees in DNB/Support, an interim rating will be awarded post completion
of 2 months after allocation and the final payout will be 75% or rating based
payout whichever is higher for individual rating based component for 6 months.
8.11. Maternity and Long Leave : Associates on paid maternity leave and long leave exceeding
annual leave limits will be eligible for variable pay as per the guidelines prescribed for DNB.
This will not however impact their categorization in RMG systems.
8.12. Variable Pay payout computation and other details will be available in the Variable Pay
portal (https://paytoperf2.techmahindra.com/).
9.
ANNEXURE
Individual Performance
Category
Revenue
Enablers
HR-PO162I 6.0
Sub
category
UOM
Definition
Customer
/
Internal*
Projects
No. of
Days
TMG Project
Allocation
Data
Business
Wait (BW)
No. of
Days
Days spent
on Bench
Applicable
to
Measured
Frequency
Actual
Report
ed by
Monthly
TMG
Monthly
TMG
IBU /CSU
Business Management System
Payout
reconcil
iation
Monthly
Page 8 of 11
VARIABLE PAY POLICY
Company-Confidential
Support
NonBillable
Perform
ance
Ratings
Perform
ance
Ratings
DNB
Annual
appraisal /
Interim
Support
Annual /
Quarterly
HRMS
Annual/
appraisal /
Interim
DNB (PreSales, PMO,
Sales
Support etc.)
Flagged as
DNB
Annual /
Quarterly
HRMS
Monthly
IBU / CU Performance
Parameter
Revenues
EBIDTA
ADI
CSAT
EEI
CB
UOM
Number
%
5 Point rating
scale
5 Point rating
scale
Level on Scale of
3
Level on Scale of
3
Measurement
Freq
Quarterly
Quarterly
Actual
Measured at
IBU / CU
IBU / CU
Finance
Finance
Payout
reconciliation
Quarterly
Quarterly
Annual
IBU / CU
Corp HR
Quarterly
Bi-Annual
IBU / CU
CCO /
QMG
Quarterly
Quarterly
IBU / CU
QMG
Quarterly
Quarterly
IBU / CU
QMG
Quarterly
Source
Org. Performance
Org Performance would be assessed based on the achievements for Revenue and EBIDTA. This
would be reported by Finance Team.
10.
SEPARATION GUIDELINES
In the event of separation of the associate from Tech Mahindra the Associate shall be entitled to
variable pay as detailed below:10.1.
If the associate is active on the payout date, he is eligible for that month’s advance pay
subject to revisit/adjustment. S/he will be eligible for the previous month’s / quarter’s payout as
applicable subject to revisit/adjustment only if active as on date of pay out of reconciled
amount.
10.2.
If associate exits system before actual/advance pay out date, s/he will not be eligible
for any payout. However there will be no recovery of any previous advance variable pay outs.
10.3.
If the associate has retired as per applicable organisation / statutory guidelines s/he will
be eligible for the month/quarterly payout pro-rated to the date of retirement including
reconciled payout.
10.4.
In the event of an associate’s death while active on the rolls of the organization, a
100% payout for the month/quarter applicable on a pro-rata basis will be paid out along with
the full and final settlement.
HR-PO162I 6.0
Business Management System
Page 9 of 11
VARIABLE PAY POLICY
Company-Confidential
11.
POLICY AMENDMENTS
The Plan will be reviewed by the Compensation Team from time to time as may be required. While it is
intended that the plan will be an integral part of the Company’s Compensation Strategy, the Company
reserves the right to amend, suspend or terminate the plan in whole or in part, from time to time as
conditions warrant.
Management reserves the right of pay at discretion, in case of any situation that makes this program
unviable which is outside the control of performance as per variable compensation framework
 Tech Mahindra reserves the right, at any time, at its election and sole discretion to:
– Modify, withdraw, amend or alter any term, provision or condition of the
variable compensation policy as conditions warrant.
– Modify, amend or alter any term, provision or condition of this Scheme with
respect to any specific individual associate or a group with a primary objective
of bringing in parity in application of the scheme across, Terminate or suspend
this Policy.
– Correct and Recover variable pay on account of any errors of omission and
commission that has resulted in giving eligibility to an associate when it was
not intended or giving pay-out in excess of the intent of the document.
 Any adjustments or termination by Tech Mahindra as aforesaid shall be effective from
the effective date so stated in the communication.
 The reasons for Tech Mahindra’s plan adjustments may include, but shall in no manner
be limited to a significant refocusing of Tech Mahindra’s business model Any other
business reason
 Disqualification - In the event of misconduct or a violation of company policies by an
associate no variable pay shall be paid out.
12.
DOCUMENT HISTORY
Version
Date
Author
(functio
n)
Version 1.0
1st April,
2013
HR
C&B
HR C&B
Version 2.0
1st
October
2013
HR
C&B
HR C&B
Version 3.0
1st April
2014
HR
C&B
HR C&B
Version 4.0
29
Septembe
r 2014
HR-PO162I 6.0
th
HR C&B
Reviewed
by
HR C&B
Approved by
Nature of changes
HR Frameworks
New policy roll out
HR Frameworks
Change in parameters
HR Frameworks
HR Frameworks
Business Management System
1. Changes for DNB,
Trainees, New
Joiners
2. Addition of
Retirement clause
3. Addition of
Maternity and Long
leave clause
1. Recalibration clause
for Band P1 to E1
for DNB & Support
2. Updated Unit
Performance
Weightages /
Multipliers
Page 10 of 11
VARIABLE PAY POLICY
Company-Confidential
Version
Date
Author
(functio
n)
Reviewed
by
Version 5.0
13th
October
2014
HR C&B
HR C&B
Version 6.0
31st
Decembe
r 2014
HR C&B
HR C&B
HR-PO162I 6.0
Approved by
HR Frameworks
HR Frameworks
Business Management System
Nature of changes
1. Change in
Paramerters and
Payout period for
Band P1 – Section
5&7
1. Change in Sub
Bands for Band P1
& P2 – Section 5
Page 11 of 11
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