Step 1? The purpose of determining incentives for Company A and Company B is to promote performance growth, so incentives should be closely linked to performance growth. Hooking is generally reflected in two aspects, one is that the premise determines whether it is or not, and the other is that the way determines more or less. The former is to extract the premise, that is, whether the premise is reached directly determines whether to motivate, while the latter is to extract the method, that is, the performance completion determines the specific values of A and B.
1, extract the premise
The purpose of incentive determines that the incentive income mainly comes from the incremental part, that is, it can only be extracted from the incremental part when the basic goal is reached. Most companies will take net profit as the main assessment index, and some companies will consider all aspects comprehensively. At this time, the target value belongs to the basic target value.
Case: The extraction of Jiangxi-Guangdong Expressway (600269) reward fund is based on comprehensive consideration. Specifically, the annual incentive target net profit level of incentive assessment meets the following three conditions at the same time: first, the total net profit of the year is not less than the average of the total net profits of 20 13, 20 14 and 20 15; Second, the growth rate of net profit in that year was not less than 7% compared with the previous year; Third, the total net profit of the year is not lower than the average of the first three years of the assessment year.
2. Extraction method
The purpose of the extraction method is to link performance with the values of A and B. A simpler scheme only defines "A", but a more reasonable scheme will define "A" and "B" at the same time, thus better combining performance with motivation. Either way, the enterprise's definition of "A" is the increment of a certain part: the specific value of "A" is determined by the excess of the absolute value of net profit or other indicators corresponding to the increase of net profit. Enterprises will choose different extraction methods to determine "B" according to the actual situation. There are three common methods:
1) fixed proportion method
This method assumes that "b" is a fixed proportion. When the assessment index reaches a certain level, the company will withdraw the reward fund for the incremental part according to the fixed "B". The relationship between performance and incentive income is mainly reflected by "A". If the performance is good, the value of "A" will be large, and the total amount of incentives will be more; If the performance is poor, the value of "A" is small, and the total amount available for motivation is small. This method is simple to operate and easy to calculate.
Case: The annual reward fund of Xugong Machinery (000425) is accrued according to the excess net profit (A) and the fixed proportion of 5% (B) on the premise of meeting the extraction conditions.
2) subsection extraction method
This method divides the completion of a single indicator into intervals, and different intervals correspond to different extraction ratios "B", so the specific numerical determination methods of "A" and "B" can be better combined with performance, and the incentive income corresponding to different growth degrees is also different.
Case: Ganfeng Lithium Industry (002460), according to the excess amount of the net profit growth rate and the difference of the excess amount, accrued the corresponding proportion of incentive funds. The upper limit of the accrued reward fund is 10% of the net profit of the current year. Details are as follows:
3) Comprehensive index method
The design of this method is more complicated, but the evaluation is more comprehensive. Its essence is that enterprises need to determine the withdrawal amount according to the completion of multiple assessment indicators. Generally speaking, enterprises will introduce a comprehensive evaluation coefficient composed of several key indicators, and different extraction ratios will be corresponding to different calculation results. This method mainly considers the comprehensive index when determining "B", so as to determine the specific value.
Case: Shanghai Construction Engineering (600 170) Incentive Fund Plan takes the return on net assets, net profit and operating income as constraints, calculates the ratio of the actual value to the target value respectively, and then calculates the total score according to a certain ratio, which is converted into a constraint coefficient, and different scoring intervals correspond to different constraint coefficient values, namely "B".
Step two? Reasonable allocation of C After determining "A" and "B", "C" will naturally be determined, and then the company will allocate "C" to the incentive object in some form according to the individual proportion. Generally speaking, companies will distribute in cash, while some companies will flexibly set the distribution form according to their own enterprise characteristics and the personal acceptance of incentive objects.
1, personal ratio
The proportion of individuals is ultimately determined by the degree of personal contribution, but based on practicality, most companies will directly take salary grade, rank, post value, performance and other factors as the dimensions to measure personal contribution, so as to determine the proportion of individuals.
2. Distribution form
After determining the proportion of individuals, the final problem to be designed is in what form to allocate money to incentive objects. Most companies will give cash directly to the incentive object, but some companies will make a mandatory secondary investment in cash in order to reflect the continuity of incentives. The former can be a one-time payment or a deferred payment, while the latter is a disguised deferred payment.
1) Cash payment: paid directly to the incentive object in cash, including one-time payment and deferred payment.
2) Secondary investment:
A is used for investment, that is, the incentive funds allocated to the incentive object in proportion are directly used for investment, and the income obtained from investment is allocated to the incentive object;
B. Entrust qualified third-party institutions to purchase shares of the company with incentive funds, and when certain conditions are met, transfer the shares to the incentive object or transfer the proceeds from the sale of the shares to the account of the incentive object, so that the incentive object can be bound to the company for a longer period of time through the shares;
C is directly used as a source of funds for medium and long-term incentives such as restricted stocks or employee stock ownership plans, and can be organically connected with other incentives to form an incentive whole.
Three supplements Any incentive scheme is an organic synthesis of performance growth, employee perception, company status and other factors. Although a formula can cover the basic design logic of incentive fund, if you want to design a good scheme, the company needs to first consider whether the advantages of the method are what the company wants and whether the disadvantages of the method are acceptable to the company. Only by thinking about the pros and cons can the design be focused.
Is this what you want? Flexible operation and good motivation perception.
Incentive funds do not involve real shares, and there is almost no targeted supervision. For the company, this means that the company is not restricted in the choice of incentive objects, and it is not necessary to consider the stock source, so the scheme design is more independent. For the incentive object, the incentive fund does not need to contribute, which means that the risk it faces is low. At the same time, because most incentive funds directly withdraw funds from the increased profits, the incentive objects are more likely to perceive the correlation between the company's performance and the incentives obtained, and the incentive perception is better.
Can it be accepted: it is difficult to control and the incentive time is short.
The extraction ratio of the incentive fund is determined according to the degree of completion of some assessment indicators. If the target value is set too high, the incentive is insufficient. If the target value is set too low, it will easily lead to excessive incentives, and some external factors will also affect the achievement of the target value. Therefore, in the changeable environment, it is difficult for enterprises to control the positive correlation between the income of incentive funds and individual contributions. At the same time, the incentive fund is only withdrawn within a certain period of time, and the incentive effect drops sharply after the withdrawal is completed. Compared with the way of real stock incentive, its incentive timeliness is shorter.
Design points: select the right target and diversify the layout.
The key to the design of incentive fund scheme is to ensure the positive correlation between performance growth and incentive income, and to increase the timeliness of incentive as much as possible on the premise of ensuring incentive effect. The former requires enterprises to be accurate, while the latter requires enterprises to diversify the distribution forms as much as possible. Stepping on the right target requires enterprises to choose indicators according to the development stage and strategic direction, and also requires enterprises to determine the target value according to the development of the enterprise itself and the whole industry. Diversified distribution methods as far as possible require enterprises to first examine their own incentive system and employee acceptance. If the short-term and long-term incentives in the incentive system are perfect and the income structure and level of employees are reasonable, enterprises can link incentive funds with other long-term incentives, make up for the short incentive time through diversified distribution methods, and help to build an incentive system that organically matches short, medium and long term.
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