In addition to the salary, in Mexico some companies also provide some benefits that Guillermo Sander and Jorge Ponga, Managing Director and Consulting Partner at Hewitt Intergamma, have called supplementary remuneration. This is divided into guaranteed (which the employee receives for the simple fact of being one) and variable (which includes the participation in profits and income from results of the company or of the company itself executive). “There are usually big differences in the way of granting incentives between the different productive sectors, in addition to the fact that in each of them there are exceptions that in occasions are too important. The agro-industrial sector almost never has this type of programs, while the industrial and commercial tend to use them more”, points out Sander. According to data provided by Jorge Ponga, from a sample made up of more than 300 multinationals established in Mexico, 73% grant bonuses to their executives and only 18% offer stock plans. On average, per year, a CEO receives up to 116 days of salary, top level executives 440,000 pesos or 27% of their salary, and in some cases this compensation extends to second line executives. The criteria of 93% of the companies to grant bonuses is directly related with the performance of the executive, 47% with the results of the business in Mexico and 15% with the profits of the company in the world. Many multinationals assume that, even if business is bad in a country, its executives should enjoy the profits of the company on a global scale. “At 3M we have 20 years of experience in variable compensation: we were pioneers in Mexico. A manager can additionally earn up to 25% of his annual salary for of incentives because it is closely related to the strategy of the company. To level management is awarded 20% and at other levels the incentive can reach 15%”, says Germán Suárez, company's human resources manager. María Teresa Maldonado, administrative and compensation manager of Ceras Johnson, comments: "In the case of executives we have a bonus plan based on results for more than 13 years. An executive can obtain more than 25% of his annual salary if it exceeds the planned objectives”. According to Hewitt Intergamma consultants, in Mexico the percentage of perception The variable that an executive can obtain can be from 20 to 30%. In countries In developed countries, the percentage can be much higher, as is the case in the United States. According to Sander, the number of executives who receive awards in cash than those who receive company shares. The stock plans are considered as long-term incentives and usually include management only General and some key front-line executives. It is not an easy task to design an incentive program for administrative staff, because the relationship between the results of individual work and those of the company is much more difficult to measure. The types of programs for this level relate to the results of the company or of the people who are supported. The average amount of This compensation for administrative employees is 31 days of salary per year. “Sometimes, the criteria for distributing the individual amount per executive are based on aspects that are difficult to measure: improvement of the position or image of the company in the market. In addition, these improvements may have an influence on external variables that are not they refer to the capacity of the executive”, concludes Sander. “Part of the success of an incentive is that, first, you have a lot of objectivity to rate it; second, that it be very easy to understand and explain; third, make it very easy to show that the person who wins it has a direct impact on the results of the company", notes Suárez, who, on the other hand, believes that in the operational achievement of the collective is difficult to assess, but the individual is the easiest to perceive. Sander believes that it is important to first determine what needs to be improved and then see if incentive programs can be a real part of the improvement. "To make it work a productivity program first you have to pay decent salaries and many Companies still don't understand this.

Guiding questions

1. Can complementary remunerations be effective to encourage the

employee productivity?

2. Point out the advantages and disadvantages of variable economic incentives.

3. Considering the difficulties in measuring improvements in the performance of

administrators, what should an incentive plan look like for this type of

staff?

4. What other alternatives do you recommend to motivate or incentivize the

employees?

Answer rating: 100% (QA)

Q1 Can complementary remunerations be effective to encourage the employee productivity A1 Yes complementary remunerations can be effective to encourag... View the full answer