BACK TO OFFICE

Challenging in developing an incentive for back office

and support

Presented By:
Yusuf Nadaf - 16
Hasitha Rupakula - 17
What is an Incentive?
Incentive is defined as compensation, other than base wages or salaries, which fluctuates
according to employee’s attainment of some standard, such as a prescribed formula,
individual or group goals, or company earnings.

In the traditional system, the employee who desires more compensation or the supervisor
who wishes to pay the employee more has to somehow re-describe the job to be at a
higher level in order to be worth more. Incentive pay plans allow the employee to earn
more for improvement in the measures of results without having to change jobs or get
them re-classified.
Need for incentive scheme in Back Office:
● In Indian conditions, back offices were paid a
fixed pay
● This was predictable and less challenging which
affected the performance of back office and
support staff
● Back office is recognized as essential part of
operational success
● This makes it important to design an incentive
scheme to evaluate, reward the performance
● Bank back office is the backbone of its operations
● It is very much important for banks to disburse
loan documents at the earliest otherwise customer
may switch over to other banks.
● It is very much necessary that along with the sale
field force, back office team should equally be
motivated with good performance incentive
scheme.
Challenges in developing Incentive for Back office & Support:
Defining SMART (Specific, Measurable, Attainable, Realistic, & Timely) goals and linking the
same with the company’s goals is the challenge.

The work itself is a major determinant of whether to pay for time or output. The work
characteristics to consider include

(1) Measurability of output

(2) The relationship between effort and output;

(3) The degree of standardization

(4) Requirements for quality as well as quantity

(5) Competitive conditions

Rational Incentive Scheme:
Motivation: Incentive schemes which are fully
transparent provide not only financial incentive but
also rewards people according to their level of
performance.

Corporate Objectives: It acts as a tool to achieve

the organizational objectives Individual Objectives:
Helps in fulfillment of individual needs for growth
in their careers
Six Sigma Concept in Calculating TAT and Error:
• Six Sigma is a measurement tool to evaluate the
performance of the departments in terms of quality
standard, Turn around Time.

• For Six Sigma Compliance, errors allowed are 3.4

out of 1 million cases processed which is equivalent
to ZERO

• Whenever Number of errors is found, the same

numbers are extrapolated to the tune of 1 million
cases processed and accordingly sigma scores are
derived.
Balance Score Card:
• Balance Score Card is a measurement tool which is
based on the scores derived out of Productivity
Calculator, TAT and Error Sigma Score

• Learning of the departments in terms of points

against the benchmark given by management

• Audit Scores given by Internal Auditors based on

their analysis against the benchmark set
Case Brief: Challenges in developing an incentive for back office and support:

Sav Z Bank has been doing extremely well in all The bank was strong in retail operations which
departments and had a vision of becoming one of the includes
best private banks
1) Vehicle Loan
However, the employees were unhappy with the
2) Consumer goods loan
current incentive structure as underperformers and
excellent performers are paid same rate 3) Savings Account
Genex Consultants who are pioneers in designing 4) Current Account
incentive structures were asked to prepare incentive
scheme for employees which are challenging and
rewardng
 Industry standards have been recommended which will
Recommendations of Genex: be used as a tool for comparing the

Genex consultants studied the organizational

structure and present incentive scheme. They
recommended complete scrapping of the present
incentive scheme and recommended five parameters
for evaluating the performance of the employees as
well the team/department.

The five parameters are:

1) Productivity

2) Turnaround time (TAT)

3) Quality

4) Audit Score

5) Learning
Recommendations of Genex:
Genex has recommended introducing “Balance Score
Card” in the bank for evaluation of performance.

Productivity should not be less than 100% as per the

consultant’s recommendations to the management.
For that they created two tools

1) Productivity Measurement

2) TAT (Turn Around Time) and quality in terms of

SIGMA value HR department should receive the
actual performance of individual employees from the
department head as well as the report of the internal
auditor who has carried out audit in the department at
the end of the year.
Rating Concept for Productivity:
Rating Concept for Productivity:
Following are the data for the learning scores earned by respective
departments/ auditors:
Performance Measurement Tool:
Solution:
Solution - Productivity:
Productivity:
This data has been made using the rating concept of
productivity of rating scales 3,4 and 5.

Rating 3 = Good Performers(80-90%)

Rating 4 = Ok Performers(70-80%)

Rating 5 = Poor Performers(below 70%)

Rating 2 = Above 90%

Rating 1 = Above 100%

Rating 2 & 1 are eligible to promotions based on our

calculations