A new salary structure loaded with handsome incentives has been introduced at Tata Motors to reward the best performers handsomely.
Tata Motors has had a financial turnaround last year. It has achieved a strong pull back in both passenger vehicle (22 percent growth) and in commercial vehicle (23 percent growth) sales during last year. And it now wants to reward its employees accordingly.
Tata Motors will give away ESOPs to some 200-odd employees. The automobile company will issue fresh equity shares to identified talent who have helped boost market share, bottom line gain and free cash flow in the domestic market. The ESOPs will be granted in the second quarter of this year, followed by first quarter of every year starting FY21. The objective is to create a ‘ring fence’ and retain critical talent during the turnaround phase.
PB Balaji, group chief financial officer, Tata Motors says, “This is a very big call for the company and objectives are very clear, drive long-term focus on competitive, consistent, cash accretive growth, ring fence critical talent on during the turnaround phase, match employee payoffs the long-term gestation period of key initiatives.”
A new salary structure loaded with handsome incentives was introduced at Tata Motors to reward the best performers handsomely. Employees with lowest level of performance get 10 per cent of their salary as incentive, while the high performers earn up to 40 per cent of their salary as incentives.
The salary structure of sales team has always been loaded with heavy incentives. Sales executives who fullfill their target get 110 per cent of their salary as incentives while those achieving 120 per cent of their target get 200 per cent as incentive. And people who are able to get 150 per cent of their target get 300 per cent of their salary. And for those who achieve below 70 per cent of their target the incentive is zero.
“So this has basically covered key talent in Tata Motors domestic; roughly about 200-odd people is what we are looking at. The criteria will be cumulative delivery over the performance period for the following three key metrics – market share gain, EBIT margin improvement, free cash flow as a percentage of revenue, all of the domestic business. This will be equity settled with Tata Motors shares by issuing fresh shares to employees,” says Balaji.