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Challenge

Electronic retail companies aim to sell their goods while focusing on building a sound relationship with their customers by providing high-quality technical after-sales services.

The main challenge was to develop from scratch an incentive plan which rewards employees for high performance while increasing both morale and job satisfaction. Due to the high variability of the teams involved, it was imperative for the plan to follow a tailored approach with indicators and targets that meet the needs of each sub-team, guiding them to focus on what brings the most value to the company. Thus, the challenge was to design a plan capable of ensuring employee differentiation, while never losing sight of teamwork and collective objectives.

In the end, the main goal was to develop a sustainable and gainful plan for both employees and the company, associated with a quantitative estimation of the benefits and costs associated with its implementation.

Solution

Firstly, a macro-structure of the plan was designed, including a common framework with individual and collective components and guidelines for efficiency and quality. Then, a customized set of indicators was identified for each sub-team, guaranteeing the plan fit their specific reality.

To build the final optimal incentive plan structure it was crucial to understand how the different plan structures and components influence employee productivity and work quality.

Since the plan was developed from scratch, benchmarks from previous incentive projects and the literature were used to establish the relationships between the introduction of different plan components (individual/collective, quantitative/qualitative, etc.) and the employees’ performance increments along various dimensions.

Afterward, using the relationships established before and the historical performance indicators collected, a thorough simulation tool was developed, allowing the team to:

  • Simulate different plan structures and scenarios (base value, plan components, performance indicators, indicators weights, minimum and maximum achievement rates, etc.)
  • Foresee the quantitative impact in terms of expected return on investment and overall costs for each scenario
  • Perform sensitivity analysis on the expected quantitative impacts in terms of variable performance benefits

Finally, the simulation tool was leveraged to select the best incentive plan structure for implementation.

Result

Although the incentive plan was designed according to the specificities of each team involved, with a custom set of indicators and targets, its structure focuses on common guidelines which facilitate the communication and implementation of the plan fairly and transparently.

The developed simulation tool allowed testing of different scenarios, plan structures, and indicator weights to quantify the end-to-end costs and gains obtained with the implementation of an incentive plan.

The estimated impacts of implementing the plan anticipate its economic sustainability with a 98% return on investment, representing gains in productivity, NPS (net promoter score), employee retention, and turnaround time.

By: Carolina Couto , Vasco Patarata , José Queiroga

Service Applied
Workforce planning
Industry Applied
Retail & e-commerce
Delivery Mode Applied
Consultancy
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