WHY OUR AUTO DEALERS ARE FAILED IN TERMS OF RECOGNIZE PERFORMER & LAGGARDS WHILE PAYING INCENTIVES---INTRODUCING PROFIT LINKED INCENTIVE STRUCTURE

WHY OUR AUTO DEALERS ARE FAILED IN TERMS OF RECOGNIZE PERFORMER & LAGGARDS WHILE PAYING INCENTIVES---INTRODUCING PROFIT LINKED INCENTIVE STRUCTURE

• 1.
  WHY OUR AUTODEALERS ARE FAILED IN TERMS OF RECOGNISE PERFORMER & LAGGARDS WHILE PAYING INCENTIVES
• 2.
  PLIS PROFIT LINKED INCENTIVE STRUCTURE 2
• 3.
  EMPLOYER OBJECTIVE OF THE PAYINGINCENTIVES • Motivation of employees • Increase in Profitability & Productivity • Enhancement in customer delight 3
• 4.
  CURRENT MARKET SCENARIO 73% ofthe parameters across business drivers are absent in auto dealerships currently. Mismatch in incentive parameters with business objectives leading to sub optimal performance 4 Profitability Productivity Customer Delight Sales Turnover Accessories Turn over Parameters currently absent Parameters currently in practice
• 5.
  PREREQUISITE OF INCENTIVESTRUCTURE 5 Motivation of employees Identify & reward performers Aligning individual performance to business objectives -Profitability, Productivity and Customer delight
• 6.
  PROFIT LINKED INCENTIVESTRUCTURE (PLIS) – A PARADIGM SHIFT 6 To design an incentive scheme linked to profits ensuring higher incentive payout for higher profits Self-funding Aligned with business objectives Recognizes Performance To widen the scope of performance covering profitability & productivity To recognize and reward performance based on their contribution including support staff Benchmarked To maintain incentive levels in line with the market scenario Facilitate transition To ensure changes in incentive structure are reasonable w.r.t existing payouts for dealer workforce
• 7.
  KEY STEPS OFINCENTIVE CYCLE 7 Profit Planner Arrive Incentive Kitty Know Designation Wise share Set Parameter wise weightage Set Targets Design Incentive Scheme Update Actuals Calculate & Payout Incentives Simulate profit planner to estimate profitability levels for different performance scenarios Arrive at the incentive kitty for respective business verticals as percentage of margin Divide the incentive kitty among various designations for the business vertical Inform the respective HODs about the average incentive available to design the incentive scheme based on business requirements At the end of the month, countercheck the actual payments against achievement level Based on the feedback, modify the weightages/ parameters/ incentive kitty to ensure accurate incentive scheme
• 8.
  DEGREE OF FREEDOM(DOF) 8 The incentive scheme provides 3 degrees of freedom (DoF) Kitty as a % of net retained income Designation-wise incentive share Parameter-wise weightage for each designation
• 9.
  DESIGNATION WISE PARAMETERWEIGHTAGE 9 Recommended Existing 65% 1% 2% 6% 12% 2% 1% 11% Volume True Value Others Sales Turnover Finance Cases Insurance Cases Ext. Warranty Cases Acc.Turn over 43% 12% 8% 7% 6% 4% 3% 3% 3% 2% 2% Volume Discount Acc.Turn over Lead Management Finance Cases Finance Penetration Sales Turnover Others Booking to delivery Time Retained Income Acc.Discount Finance Process True Value Ext. Warranty Cases Customer Satisfaction Finance Income Insurance Penetration Gross Profit Operating Profit Insurance Cases Stock Holding Inventory Management Retail Market share Acc.Others Insurance Income Penetration Commission
• 10.
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