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YuYudhaSatdhaSatyayaYuYudhaSatdhaSatyayaO v e r a l l E m p l o y e e E f f e c t i v e n e s sO v e r a l l E m p l o y e e E f f e c t i v e n e s s
start
Incentive
System
Job promotion
and salary
increment
Job promotion
and salary
increment
Types of RewardAssessment
Impacts
Long Term
As a mechanism to build in a performance
Objectives of Periodic (Monthly)
Incentive System :
Incentive
Framework
SampleIncentive
EvaluationIncentive
SchemeOEE OEE
calculation
OEE
To incentive
YSP 2
incrementincrement
Annual bonusAnnual bonus
Periodic
incentive
Periodic
incentive
Mid Term
Short Term
As a mechanism to build in a performance
based variable portion in individual monthly
take home pay
Allow a relatively significant different
of monthly income between good and
bad performers
Provide a more frequent periodic
assessment on individual performance
Incentive Framework
Incentive scheme form variable portion of Take home pay more dynamic based on
his/her performance
Individual
monthly incentive
Individual
monthly incentive
Incentive
systemSampleIncentive
EvaluationIncentive
SchemeOEE OEE
calculation
OEE
To incentive
YSP
Department
performance
Department
performance
Individual
incentive rate
Individual
incentive ratex
•A fixed percentage over the basic salary pre-determined by policy
•Normally do not change however it can be revised quarterly, semi-annually or yearly
•Depends on the combined effect of individual function performance and company performances
•Vary from month to month and from individual to individual
Basic Salary
and allowance
Monthly
Incentive
Commission
/overtime
Fixed Portion
Variable Portion
3
Incentive Evaluation
Incentive
system
Incentive
FrameworkSampleIncentive
SchemeOEE OEE
calculation
OEE
To incentive
YSP
•The calculation method
must be straight forward
•The parameters used
must be quantifiable or
made quantifiable
through conversion of
qualitative data into
quantitative result
•As monthly processing
is required and the
scope of coverage is
wide, infrastructure and
resources must be
allocated to support the
performance evaluation
process
•The data must be readily
available and accessible
•Ideally, the data can be
extracted directly from
existing database to avoid
double entering
AccessibleAccessible ResourceResourceMeasurableMeasurable
4
Incentive Scheme
Incentive
system
Incentive
FrameworkIncentive
Evaluation
Background
• Necessity to leverage motivation
lever of employee to contribute
Objectives
• To recognize any employees who
consistently demonstrate outstanding
performance toward achievement of
SampleOEE OEE
calculation
OEE
To incentive
YSP 5
lever of employee to contribute
to corporate strategic objectives
by achieving a set of KPIs
Target for Cost and Quality
performance toward achievement of
productivity & error rate
• To differentiate clearly between outstanding,
mediocre and low performer
Incentive
system
Incentive
FrameworkIncentive
Evaluation
OEEIncentive
Scheme
OEE is an integrated metrics that measure the level of
availability, performance rate, and quality resulting from an
employee
OEE
SampleOEE
calculation
OEE
To incentive
YSP 6
Availability Performance Rate Quality Rate
6 Big Losses
• absents
• lateness• Idling
• Reduced Speed/ Capacity Losses
• Scrap/ Rework
• over SLA
Incentive
system
Incentive
FrameworkIncentive
Evaluation
OEECalculation
Incentive
SchemeOEE
• Availability = standard working hours – (hours lateness + hours absents)
Standard working hours
SampleOEE
To incentive
YSP 7
• Performance rate = Transaction done in that month
Targeted transaction in that month
• Quality = Transaction within SLA
Overall transaction
OEE = Availability x Performance Rate x Quality
Incentive
system
Incentive
FrameworkIncentive
Evaluation
OEE to incentive
Incentive
SchemeOEE OEE
calculation
Individual Monthly
Incentive
Sample
YSP 8
XDepartmental
KPI
Individual
Incentive Rate
= Monthly dept KPI
Bonus Unit X
= Overall Equipment
Effectiveness
= Basic Salary/12
Incentive
system
Incentive
FrameworkIncentive
Evaluation
SampleIncentive
SchemeOEE OEE
calculation
OEE
To incentive
YSP 9
Assume that Department KPI achievement
for Loan Processing (Irfan) score is 4.05 or
equal to 81%
Assume that on that month Irfan never late nor
absents
OEE = Availability x Performance x Quality
OEE = 100% x 131% x 92.1%
OEE = 121%
If Irfan has gross salary Rp. 4 mio,
the incentive received by Ifan is
= Dept KPI x OEE x BU
= 81% x 121% x (Rp. 4,000,000/12)
= Rp. 325,757