FORMULATION AND IMPLEMENTATION OF

FINANCIAL AND NON FINANCIAL INCENTIVE PLAN IN ABC

TELEKOM

A Project Report

Prepared By

G.I. Nadeeshani

CCHRM /2015/NG/02/03

Course: Certificate Course in Human Resource Management

August 2014

INSTITUTE OF PERSONNEL MANAGEMENT SRI LANKA (INC.)

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 Contents

Acknowledgement 03

Executive summary 04

Background of the organization 05

Objective of the organization 06

Services and customers 07

Organizational Structure 09

Objective of the study 10

Review of Literature 11

Methodology 19

Analysis 20

Findings (key issues) 26

Recommendations 27

List of References 28

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 Acknowledgement

I take this opportunity to sincerely thank the following personnel who helped me in
numerous ways to do this project report and complete same successfully.

First and foremost my sincere thanks go to further all lectures at IPM Sri Lanka for
enhancing my knowledge in HRM. And also my special thanks to the Human Resources
Department at ABC Telecom for professionally assisting me to complete this assignment.

Furthermore I extend my thanks and gratitude two my parents, friends and colleagues
who have provided sufficient information to complete my project and for giving me a
helping hand throughout this task to keep one step ahead in my desired career of Human
Resources Management.

Finally many thanks to the staff at IPM for their support and advice given to me in
preparing this project report.

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Executive Summary

The CCHRM project report was done on the field of Compensation Management of
employees in an organization. The main focus was to identify how the process of
incentives is carried out within an organization using number of different methods, steps
and procedures in order to identify this process. The organization chosen was ABC
Telecom one of Sri Lankas leading Telecom service providers.

The studies were mainly conducted in the Human Resource Department where the
process of compensation management is carried out. The inquiries were made through the
respective managers in regard of the methods available to them were analyzed
interviewing and a collection of data. According to the information provided by ABC
Telecom it is clear that due to their well-planned incentive scheme they were able to
achieve great success.

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INTRODUCTION

Background of the organization

ABC Telecom

Type : Public

Founded : 1992

Headquarters : Colombo, Sri Lanka

Industry : Telecommunications

Products : Voice

Mobile

Internet

Satellite TV

ABC Telecom is a large telecommunication company operating within Sri Lanka. It

currently operates ABC Mobile the country's largest mobile phone network. ABC is a
subsidiary of Walker Tel Group and is listed on the Colombo stock exchange.

The company is also a key player in the Internet service provision market through its
internet arm. ABC also operates ABC TV, the country's premier direct to home satellite
TV service. Furthermore having made an aggressive entry into the international services
market, ABC Global has established itself as a premier provider of international services
in Sri Lanka.

ABC Telecom is a flagship investor under the aegis of the Board of Investment of Sri
Lanka and has invested over 500 million U.S. Dollars towards the development of
telecommunications infrastructure in Sri Lanka. ABC Telecom is the official Sri Lankan
partner of the Vodafone mobile community.

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Objectives of the organization

Our Vision

To be the undisputed leader in the provision of multi-sensory connectivity resulting

always, in the empowerment and enrichment of Sri Lankan lives and enterprises.

Our Mission

To lead in the provision of technology enabled connectivity touching multiple human

sensors and faculties, through committed adherence to customer-driven, responsive and
flexible business processes, and through the delivery of quality service and leading edge
technology unparalleled by any other, spurred by an empowered set of dedicated
individuals who are driven by an irrepressible desire to work as one towards a common
goal in the truest sense of the team spirit.

Corporate Values

Total commitment to our customers.

Dynamic and human-centered leadership.
Commitment to task & excellence.
Uncompromising integrity.
Professionalism and accountability.
Teamwork.
Foremost respect for concern & care.

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Services and Customers
ABC Mobile Core Business

ABC Mobile has spearheaded the mobile industry in Sri Lanka since mid-90s, propelling
it to a level of technology on par with the developed world. The company operates a
USE/SEO and JTP network, supporting the very latest in multimedia and mobile Internet
services, and also provides International Roaming facilities in over 200 destinations.
ABC Mobile is the country's largest cellular network providing services to over 5 million
customers across all provinces of the island. The company is also South Asia's first
commercial 3.5G operator.

Supplementary Business

ABC Telecom has ventured into two main supplementary telecommunications related
businesses based on licenses acquired from the Government of Sri Lanka.

Internet Business

ABC Internet was launched in 2001 with 2the primary intention of developing the IP
infrastructure required for leadership in a convergent environment. While this objective
has been achieved manifold, the company has also established a retail ISP ABC I which
currently provides services to over 6,000 subscribers.

International Business

ABC has been quick to capitalize on the liberalization of the International

Telecommunications Sector in Sri Lanka. The International services of the company now
include retail and wholesale voice services and IPLC services. Building on a rapid role
out of services and global partnerships, International Services now account for 10% of
the companys PAT.

ABC Satellite Television [ABC TV]

ABC TV is a Direct-to-Home Satellite Television Service operated by ABC Telekom.

ABC TV features world class entertainment and the widest spectrum of channels with a
special focus on News, Entertainment and Knowledge based programming. It supports a
broad array of International content including CNN, BBC, HBO, Cinemax, AXN, ESPN,
Discovery Channel; MTV and Cartoon Network, in addition to a wide portfolio of Sri
Lankan television channels. ABC Satellite TV uses state of the art ABC Video
Broadcasting through Satellite (DVB-S) technology, and aims to be a trend-setter in
Digital Satellite Television Broadcasting in Sri Lanka.

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ABC Broadband (ABCBN)

ABC Broadband Networks, a fully owned subsidiary of ABC Telekom, is an Internet

Service Provider which provides CDMA, WiMAX and a public Wi-Fi network.

ABC CDMA

It recently commenced the provision of fixed wireless telephony services, with the launch
of ABC CDMA. Currently, ABCCDMA has the lowest call charges among the CDMA
providers in Sri Lanka. It provides 1800 minutes calls free within ABC CDMA network
while calls to other networks are charged as Rs.2.00 per minute at anytime to any
network.

ABC CDMA has a good coverage throughout the island.

Organizational Structure

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1. Chairman

2. Chief executive officer

3. Chief coperate officer

4. Board of directors

5. Human resources manager

I. Asst. human resources manager
II. Human resources executive
6. IT manager
I. Asst. IT manager
7. Finance manager
I. Accountant
II. Accounts executive
8. Customer service manager
I. Asst. Customer service manager
II. Customer service executive
9. Engineering manager
I. Asst. Engendering manager
10. Research &Development manager
I. Asst. Research & Development manager
11. Marketing manager
I. Asst. marketing manager
II. Marketing executive

12. Programme manager

13. Strategy manager

14. Operating manager

15. Senior vice president

16. Vice president

OBJECTIVES OF THE STUDY

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 Primary Objective
o To get a broad understanding of Variable pay / Incentive.

Secondary Objective
o To understand the importance of an effective incentive scheme.
o To understand the types of incentives available for an organization.
o To analyze the practical usage of theories for an effective incentive
scheme in achieving goals of an organization.
o To enhance my knowledge on and study about incentives.
o Completion of this is a partial requirement of CCHRM.

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REVIEW OF LITERATURE

Introduction

Pay is not the central issue for attracting and retaining employees (although some
will argue that it is). Pay is still important, but so are other issues. People rarely leave a
job for money alone. Instead, they leave for career advancement, technical or career
challenge, communication reasons (lack of appreciation by company, inability to have an
impact at the company, etc.), or job security. Some employees who are money motivated,
particularly sales people, and those who are significantly under-employed may leave for
money.

Managing pay involves two main issues:

1. Controlling costs, and

2. Leveraging pay (getting the most "bang for the buck").

This is done by establishing an agile compensation and benefits system that track
costs, helps ensure pay equity, is understood by employees, and keeps in touch with
employee desires and what's popular in the market.

Do people work harder if pay is tied down to performance? The answer appears to
be yes under the right circumstances. People do spend more time working when offered
incentives to do so, as opposed to simply receiving base pay for the hours worked.

Employers apparently believe it too. Because a growing number are altering their
traditional compensation programs to provide some part of employees pay in a variable
fashion. Typically an employer bases a portion of the pay on how well the individual,
team, organization performs. The percentage varies somewhat, but roughly two thirds of
companies currently offer variable pay though individual incentives, around a third offer
team incentives and over half offer organizational performance incentives.

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Incentive

Incentive or variable pay is compensation linked to individual, team, and organizational

performance.

Incentive is a stimulus or a reason for producing action. Almost all of the human
motivations can serve as incentive. (Earnest Dither)

An incentive can be defined as a payment, concession, or an arrangement to encourage

above average effort in work.

Thus incentive is the bridge to gap the willingness to work and the capacity to work.

Objectives of incentives

1) Increase productivity
2) Above Average Performance
3) Moral booster
4) Control tardiness &absenteeism
5) Retention of competent employees
6) Create job satisfaction
7) Reduce grievances

Financial Incentives

Incentives

Non Financial Incentives

Types of Incentive Systems

Incentive pay is employee compensation that varies with the organization's business
performance. Variable compensation plans continue to increase in popularity. According
to a recent survey by Hewitt Associates, variable pay awards as a percentage of exempt
payroll has increased steadily from 4% in 1990 to almost 10% in 2000. Some of this
increase has been fueled by the popularity of hiring bonuses.

The classic type of variable pay is sales commission in which the sales representative
receives an award (usually expressed as a percentage of sales) for each sale. The more
sales achieved, the higher the total commission income for the sales representative and

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the higher the revenue and profits for the organization. On the other hand, if the sales
representative doesn't sell anything, the organization doesn't earn any revenue, but they
also don't have any commission expense. The sales representative doesn't have any
commission income. Thus with variable pay systems the interests of the organization are
closely linked to the interests of the individual employee. By contrast, the traditional base
salary represents fixed compensation. Base salary is paid to employees regardless of how
well the organization is performing.

Variable compensation plans are rapidly growing in popularity. Their growth is driven by
three factors:

1. Variable pay is counter-cyclical. It is more costly to the organization that is

performing well; yet the organization that is performing well is better able to
afford the expense. It is less costly when the business is not doing well and is less
able to afford variable pay. In the past, organizations could only reduce employee
compensation by reducing the number of employees (i.e. layoff). A variable pay
system works well when the organization's business performance is equal to or
better than the industry average. However, if your organization is performing
poorly while the industry is doing well overall, then your employees' total
compensation (variable plus fixed pay) will be less than other companies in the
industry, which could lead to poor morale and/or increased turnover.
2. Variable pay links employee goals with the organization goals. If the
organization performs well, then the employee will earn more income. Thus the
employee and the organization have mutual interests. Here's where design of the
variable pay system is important. To be optimally successful, the employee must
understand how their individual performance can impact their variable pay (and
therefore the company performance). This is called "line of sight". Line of sight
improves as organizations reduce layers of management.
3. The employee is motivated to help the organization do well. The most
effective variable pay systems have been those that have established team or
business unit performance targets. Although the line of sight is better with
individual goals than team goals, team goals have the advantage of peer influence,
which can be a very strong motivator. On the other end of the continuum is
company-wide goals (for a small organization, team goals and company goals are
basically the same). These too can be effective, although the line of sight is less
and therefore the motivation to achieve the goals may be less

Financial Incentives

Any incentive which is in the form of cash or wealth is know as financial or monitory
incentive. In other words any incentive that could be measured with money is
considered a financial or monitory incentive. Some types of financial incentives;

Target incentive
Commission on sales
Bonus

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 Overtime payment and differential piece rate
Differentiated piece rate

Lets take a close look at some main financial incentive types.

Formal bonus or incentive plans are common and popular. These plans are typically
available for upper management employees although participation in the plans is
widening, especially as organizations remove layers of management. Current incentive
plan participants include about two-thirds of middle managers, 25% to 50% of technical
individual contributors, and 20% to 35% of non-technical individual contributors. The
target formal bonus award is about 60% of the Chief Executive Officer's base salary, 25%
to 50% of senior managers' base salary, 15% to 25% of middle managers' base salary,
10% to 20% of Senior Level Technical Contributors' salary, and 7% to 12% of other
professionals' base salaries. The formal bonus award is typically paid on an annual basis.
The size of the award is usually based on a combination of the participant's individual job
performance, the business performance of the participant's division or department, and/or
the performance of the entire company. Typical performance criteria includes profit
before tax or operating profit, sales level or sales growth, and/or the achievement of
specific company or division goals. A survey conducted by the American Compensation
Association early in 2000 indicated that this was the top motivator for participants.

Profit sharing plans are funded by the organization's profits based on a specified
formula. The profit sharing pool is then allocated to employees by some means, usually
as a percentage of their base salary. Profit sharing plans, like variable pay plans in
general, are growing in popularity. Currently approximately 40% of companies offer
profit sharing plans. A typical profit sharing award is 5% to 6% of employees' base
salary.

Lump sum merit awards provide financial recognition for an individual's job
performance in lieu of merit-based salary increases. This is an effective way to provide
financial recognition, especially to those individuals whose base salary is already
relatively high. The lump sum merit award must be re-earned each year and is usually
paid during an annual salary review period.

Spot bonuses are also financial awards to provide recognition for an individual's work
accomplishments. Typically these are paid immediately after a significant job
performance event, unlike a lump sum merit award which is paid as a part of the annual
salary review process.

Gain sharing plans allow employees to share in productivity gains in accordance with a
pre-determined formula. Typically the plans are established with participant involvement
and are typically designed for specific work groups, but company-wide programs also
exist.

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Alternative pay is a term commonly used. It refers to alternative ways of paying people
other than for their time, which is the most common method. Thus alternative pay plans
generally include those listed above under incentive systems. Also included as an
alternative pay system is skills-based pay or pay-for-knowledge. Under this pay
system, an employee's compensation is based on the number of specified skills or tasks
he or she has mastered

Stock Plans

Stock plans are very popular. A mystique surrounds them, perhaps because a few people
have gotten rich from stock options. Virtually all companies offer some type of stock
plan to employees.

The most common type of stock plan is the stock option plan. In a typical stock option
plan, the employee is offered a specific number of shares which he/she can exercise (buy)
at some specified time in the future. The price at which the employee can buy the stock is
equal to the market price at the time the stock option was granted (grant price). The
employee's gain is equal to the market value of the stock at the time it is exercised, less
the grant price. If the market price of the stock remains the same or decreases relative to
the grant price, then the stock option is worthless. Stock options are typically offered to
managers, most technical individual contributors and about half of the other
professionals. Smaller organizations offer stock options more widely, in some cases to all
employees.

Stock options provide companies with a long term incentive and retention tool. The
recipients of stock options are motivated to help the company perform well, so the stock
will appreciate in value (although there's a line of sight problem here for most
participants). Because they must wait several years to receive the entire stock option
grant, employees are motivated to remain with the company, as long as the stock value is
increasing.

Employee stock purchase plans are also popular. The stock purchase plan is typically
available to all eligible employees in the company. Employees can purchase company
stock through payroll deductions (typically up to 10% of pay) at a price that is below the
market price (typically 85% of market price).

Health and welfare plans

Health and welfare plans typically cost organizations 8% to 10% of payroll. For as costly
as these plans are, employees often take them for granted. To install health and insurance
plans, use insurance brokers. In addition to helping install the plans, they can help
negotiate contracts and administer the plans.

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Medical insurance is the most costly item in this category, equaling 7% to 8% of
payroll. Typically companies provide 85% of the cost of employee medical care and 75%
of dependent care. In the early 1990's, medical plan costs were increasing at an annual
rate of more than 20%. In the past year annual medical cost increases have averaged only
3%, with many companies realizing a decrease in medical costs. Competition, in the form
of physician and hospital networks, and health maintenance organizations (HMOs), has
helped control costs. Medical plans with the most usage controls (restrictions on which
providers members can use) are those with the most effective cost controls

Life insurance equal to two times the employee's annual salary and AD&D (Accidental
Death) insurance equal to two times the employee's annual salary are provided by the
typical company.

Supplemental life insurance plans and dependent life insurance plans are offered by
approximately three-fourths of companies. These plans allow employees to purchase
additional life insurance coverage through payroll deduction and at group rates, at little or
no cost to the company

Non Financial Incentives

Non financial incentives are also called non monitory incentives. Non financial incentives
relates to social and physiological needs of the employee. Some of them are as follows;

Rewards and Recognition

Promotions
Enhanced responsibilities and challenge
Status and ranking
Training
Appreciation and Praise
Freedom for decision-making

Companies spend approximately 10% of payroll on paid time off plans. This is money
well spent by the organization. Paid time off is highly valued, especially with today's
time pressures on employees and their families. To the benefit of companies, paid time
off often becomes on-call time, since employees understand that companies may need
their services or consultation while they are away. Employees are often willing to provide
the company this flexibility, especially if the company provides the same flexibility to
employees. More than a third of companies have a formal policy that allows for flexible
scheduling.

Holidays are paid days-off provided to all employees in the company (the company
closes). The average number of holidays provided is 10.5 per year. The seven holidays
that virtually every company provides are New Years day, Memorial Day, Independence
day, Labor day, Thanksgiving day, the day after Thanksgiving, and Christmas Day. The
next most popular days are President's day and Christmas Eve day.

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The number of vacation days granted to employees varies with years of service.
Typically employees are granted 10 days of vacation per year upon hire, 15 days after
five years of service, and 20 days after 15 years of service.

Sick pay is paid time-off for employee illness. Most companies also allow employees to
use sick leave for the illness of a family member. Nine days per year is the average
amount of sick leave granted.

Short term disability plans or salary continuance plans are offered by over 70% of
companies. Most of these companies provide salary continuance (continue to pay the
employee's full salary) for the first month of disability, then a short term disability benefit
that ranges from 60% to 70% of the employee's salary for up to three months of
disability.

Long term disability benefits are provided by almost all companies after an employee
has been disabled for a period of time, typically three months. The benefit amount ranges
from 60% to 70% of the employee's salary.

Advantages of financial incentives and non financial incentives.

Advantages of financial incentives Advantages of non financial incentives

People are generally motivated for It satisfies social and physiological
money needs of employees

Cash provides a sense of security in Financial incentives when used

employees continuously loose its attractiveness
as employees get used to it. But a
non financial incentive remains
more effective as it sparks to the
heart of employees.

As it could be measured with All employees are not motivated by

money, it becomes much more money
tangible than non financial
incentives

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Designing and developing a successful incentive scheme

The aim of any incentive scheme should be to achieve a higher level of out put compared
to what you achieve under normal circumstances. Hence good incentive schemes will
stretch the employees towards their full capacity.

Targets should be stretched ones that demands more effort from the employees
Targets should be clear, precise and achievable
There should be a direct relationship employee skill& effort and out put
Proper timing
Geared to employees needs
Communicate the rewards fully & clearly so that the employees see their worth
Ensure fairness
Should be attractive enough to motivate employees.

Problems associated in developing incentive schemes

The challenge of developing a successful incentive scheme is to strike a balance between

what the organization wants to achieve through the incentive scheme & ensuring it is
attractive to the employees, managing the cost benefit relationship of the scheme
&ensuring the fairness of all employees

You should be very careful that you avoid the following.

Rewarding under performance

Punishing good performance

Essentials of a good incentive plan

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 I. Suitable climate
II. Information as to goals
III. Simplicity
IV. Just and Equitable
V. Flexible
VI. Attractive
VII. Economical
VIII. Minimum guaranteed wages
IX. Grievance procedure
X. Stability
XI. Comprehensive coverage
XII. Conductive to employees health and welfare
XIII. Attainable standards

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ANALYSIS

Methodology:

Methods I used to collect data can be categorized as follows.

Primary data were collected through observations and interviews, visit to premises and
informal discussions and questions. The interviews were open and in depth, sometimes in
informal discussions. Apart from the executive management in Human Resources and
Marketing department, further informal interviews and questions were held with selected
employees. Observations and visit premises were used to gain the other informations
about the organization which are relevant to understanding the incentive scheme.

Secondary data was collected from ABC Telekoms Annual Reports, other publications
related to incentive scheme systems, Internet/web sites.

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Analysis:

Motivating Sales People

Ultimately, your success is in the hands of your sales people. Thats why sales force
motivation is so important. Motivating salespeople is the best way to boost your bottom
line by increasing retention, advancing performance and reinforcing key behaviors that
lead to success.

A variety of sales force motivation techniques are available; determining the right
strategy for you begins with understanding what motivates the diverse individuals who
make up your sales force. Age and lifestyle and other factors come into play when
defining how to motivate salespeople in an optimal way. Youll want a sales incentive
program that both reflects your company values and offers enough choice to appeal to
your entire organization.

By motivating salespeople, youll create forward-focusing momentum that centers on a

trip, a service or a merchandise reward. Youll help people establish a tangible goal one
that offers each sales person something to look forward to and focus on in the face of
frustrations or obstacles.

If you think sales people are motivated by money, think again. Of the eight motivators
measured, the extent to which one is motivated by financial rewards, such as money and
material possessions, ranks number five on the list.

1. Recognition/attention The extent to which one values recognition for work well
done; enjoyed being the center of attention

2. Control - The extent to which one prefers positions of leadership with control, like
being in charge.

3. Money The extent to which one is motivated by financial rewards, such as money
and material possessions.

4. Freedom - The extent to which one values personal freedom to make decisions and
function independently.

5. Developing expertise The extent to which one values becoming an expert in

developing skills in their chosen field.

6. Affiliation - the extent to which one is motivated by interactions with other people.
Enjoys helping and dealing with people

7. Security/stability - the extent to which one is motivated by stability and security of life
and their career

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8. Achievement - the extent to which one is motivated by overcoming successful
challenges: enjoys challenges for their own sake.

The development of the motivations scale began with the research into existing literature
concerning sales motivations and values, as well as more general theoretical frameworks
of human motivation. In addition, existing measures of sales values and motivations were
also reviewed.

We al need to feel motivated to do our jobs well, but salespeople with tough targets and
tight deadlines can require more motivation than most. In a profession notorious for its
high turnover, incentives are a reason to stay.

It is common knowledge that many sales people can calculate how much commission they have
earned faster and more accurate than any super computer. Indeed, money is a key driving force
that motivates most, and certainly for the more successful ones.

However, is money then the ONLY motivator, or are there anything else?

If you were to ask anyone why they want to be one, there will usually be 3 answers:

1. for the money (of course);

2. Being able to directly link their efforts to tangible results; and
3. Having the (relative) independence and flexibility in their jobs

As such, while money may be the key driver for most, it certainly is not the only one.
They are also motivated by a sense of achievement, and the more successful ones usually
have large egos as well.

If we were to look deep into what motivates people, here are 2 factors that we need to
consider:

1. Are the rewards attractive (or punishment severe) enough?

2. Am I able to achieve it?

Avoiding Pain vs. Seeking Pleasure

While making money is a great pleasure for many people, including sales people, some
are first motivated by avoiding the punishment of NOT achieving their monthly,
quarterly or annual sales targets. Hence, it's a very common practice for sales people to
"hide" potential contracts to "save them for the next financial period", rather than to risk
NOT meeting the sales targets for that period.

Sales people are indeed masters of work flow optimization in this sense. However, this
does not help you in getting results from your sales team, and sometimes deals may be
lost due to the delays caused when sales people want to "save them for the next quarter".

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When companies use money as the only motivator, it is also a riskier proposition. There's
nothing to prevent competitors to use the same motivator to entice your best people
(along with your best customers) to defect. While there may be some non-competitive
clauses in employment contracts, these are seldom enforceable, especially in Asia.

Motivating the Sales Force without Using Money

In a nutshell, when people join the sales force, they may do so in the hopes of making
more money. However, if you want to get them to perform to the next level of
performance, you will need to improve their skills and abilities to achieve better results.
In fact, management guru Ram Charan mentioned that if using incentives as the main
means to get better performance from the sales team is an outdated approach

If you find isolated cases of poor performance from your team, then perhaps these few
bad hats are just making excuses not to work hard. However, if you find that poor
performance is widespread and pervasive in your sales force, then you, as manager, are
making THE excuse for not providing the necessary support and guidance for your
people

Your sales force -- and the revenue it brings in -- is the lifeblood of your business. When
sales are up all is rosy; when they're down businesses wither and sometimes die. If your
business relies on a team of salespeople to generate revenue, it's worth your time and
effort to understand what motivates them.

One effective way to motivate salespeople is with an incentive program, but devising one
isn't as simple as defining a series of goals which, when met, reward people with a
monetary payout. If money were the only ingredient for an incentive program,
salespeople would simply sell more without additional incentives. Therefore, begin by
understanding what each salesperson is hoping to achieve: Is to be the highest-selling
person for the quarter? To best a personal sales record?

A good incentive program must be understandable, measurable, and achievable. Any

program that doesn't include all three of these critical components will quickly become
confusing and therefore counterproductive. As a business owner or team manager, it's
your job to state the sales incentive program in clear terms and put it in writing. Hold a
meeting to make sure each member of your sales team understands it in its entirety.

Next, make sure that you only reward measurable, monetary results. If you choose to
measure profits, make sure you measure gross profits and not net profits, because net
profits often contain hidden costs such as overhead.

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 When it comes time to decide on what the reward will be, make sure it's in relation to the
sales goal. Higher goals deserve higher rewards. An all expenses paid, seven-day trip for
a family of four to the Caribbean might seem costly to you, but if its cost is a mere
fraction of the generated sales, it will have paid for itself from increased revenue. Smaller
rewards can include tickets to concerts or sporting events, extra vacation days, or
restaurant gift certificates. Find out what each person's personal interests are and use that
information to come up with creative ideas.

Following are the methods ABC uses to motivate its sales team other than money:

Offering base salary in addition to commission. If you can, pay your sales force a
decent base salary in addition to their commission. Forcing them to work on
commission alone can create stress, which leads to burnout and high turnover;
whereas a balanced approach will help you retain top talent. Striking the right
balance between a base salary and rate of commission can be a tricky undertaking,
however. For example, while paying your salespeople a higher base salary will likely
allow you to keep a closer eye on how they spend their time, a package that's more
heavily dependent on commission may motivate them to spend more time pursuing
strong leads instead of engaging in activities that don't lend themselves to a high sales
rate.
Offering competitive benefits. Your salespeople need to feel that you support them
and value what they bring to the table. One good way to show your appreciation is by
providing each employee with a competitive benefits package that includes health
insurance, a retirement plan such as a 401(k), and generous vacation and sick time.
Providing the right training. Investing in your employee's professional growth is
investing in your business, so provide your salespeople with the proper training and
encourage them to attend tradeshows and seminars, take classes, and pursue other
avenues of professional development.
Set achievable goals. Having concrete goals to aim for is essential to success, no
matter if it's in sales, sports, or education. But don't set your people up for failure by
setting lofty goals that they cannot achieve.

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 Maintain an open-door policy. If your salespeople don't feel they can air their
grievances with you, those grievances will fester and lower morale. Make
yourself available for any salesperson that needs to check in from time to time to
share concerns or ask for constructive feedback.

Monetary incentive schemes at ABC Telekom Ltd.

ABC deals not only with GSM (mobile),it sells many other products such as ABC broad
band, ABC TV, CDMA etc.Hence,the commission paid varies from product to product.
Some of the commission schemes practiced is as follows:-

Pool commission schemes

Example: 1% or 0.5 % of total sales (usually applicable for front line customer
service staff)

Accumulative commission scheme

Example: first 10 items at 5%, next 15 items at 7.5%, all subsequent items at
10% commission

Bonus schemes

Example: Achievement of 100 connections entitles you to additional Rs xxx

Example: first 10 items at 5%, next 15 items at 7.5%, all subsequent items at
10% commission

Pyramid commissions applicable for heads and managers ,which is an over

riding commission scheme

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Allowances

Sales people get the following benefits in addition to salary and commissions

Traveling allowance
Medical

Managers and above get the following benefits in addition to salary and
commissions

Traveling allowance
Medical
Vehicle allowance
Fuel

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FINDINGS (KEY ISSUES)

Variable pay, traditionally called incentives, is additional compensation linked to

individual, team, and/or organization performance.

Effective incentive pay plans should recognize organization culture and resources, be
clear and understandable, be kept current, tie incentives to performance, recognize
individual differences, and identify plan payments separate from base pay.

According to my project report i found that all issues have been successfully covered.
ABC Telekom sales employees have their compensation tied to their performance on a
number of sales related criteria. Their sales compensation plan mainly consists of
monitory, non monitory incentives and benefits.

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RECOMMENDATIONS

The compensation paid to employees involved with sales and marketing is partly or
entirely tied to individual sales performance. Better performing salespeople receive more
total compensation than those selling less. Sales incentives are perhaps the most widely
used individual incentive.

Hence in addition to the generally offered basic incentive plan such as commission,
bonus, medical, fuel, motor vehicles, health insurance, etc. I suggest that the following
should also be considered as vital.

Recommendations for Individual performance.

Recognition awards are a type of program that recognizes individual employees

for their performance or services. However when giving recognition awards, ABC
Telekom should use specific examples to describe clearly how those receiving the
awards were selected.

Recommendations for team performance.

One prominent organization wide incentive pat plan is Gain sharing, which
provides rewards based on greater- than- expected gains in profit and/ or
productivity.

Recommendations for organizational performance.

An employee stock ownership plan (ESOP) enables employees to gain ownership

in the firm for which they work. And the feeling of higher internal moral and
greatest attention to customer service.

Recommendation for executive compensation.

Perquisites (perks) are special executive benefits usually noncash items. Perks
helps tie executives to organizations and demonstrates their important to the
companies. These visible symbols of status allow executives to be seen as very
important persons (VIP) both inside and outside their organizations. Some
common executive perks:

Transportation Financial /legal Membership

Company car or car No / low interest loans Country club
allowances
First class air travel Legal counseling Health club
Financial planning Luncheon club

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 LIST OF REFERANCES

Human resources management 10th edition Robert L. Mathis, John H. Jackson

By surfing the internet

Notes and lectures

An interview session with HR Manager for ABC Telekom

An interview session with Marketing Manager for ABC Telekom

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