Please get to know this variable remuneration model and understand how PLR can contribute to the engagement of its employees.
The job market has become increasingly challenging for people management. In addition, competitiveness in business has led to a new dispute between companies: the argument for talent.
This is a highly challenging scenario for the human resources sector, as it attracts and retains talent.
Thus, investing in actions that promote employee satisfaction has been a constant concern of HR and leadership. Together, changes in the market and accelerated growth contrasted with periods of crisis have driven a change in professionals’ profiles.
If salary and stability were decisive factors in a professional career a few years ago, this is a thought that gradually ceases to exist.
The future professional is looking for challenges, has little interest in stability, and considers, in addition to salary, the possibilities for development, learning, organizational environment, and, above all, quality of life.
This new professional profile has moved the job market; and has put the organization’s investments in its employer branding at risk. After all, talent is attracted by the employer brand. And they remain in the organization based on the actions it develops in an employee experience.
In this sense, the number of companies that have made available to their talents a competitive benefits package is growing. And among these benefits, one, in particular, has caught the attention of talent: PLR.
Do you want to understand what PLR is about and how to implement it in your company? We’ll tell you everything in this article. Follow us!
Participation in profits and results
That salary cannot be the only motivational item at work, which we have already mentioned several times. However, the best way to extract their full potential from their talents is to offer them guidance through a contract of goals and rewards for the results obtained.
So, these are not the only ones responsible for the performance of their team. However, considering that motivation is intrinsic, the human resources sector must also promote a balanced organizational climate to actions to recognize the team’s collective and individual efforts.
Therefore, companies have increasingly adhered to variable remuneration that has become a reason for attracting talent to their vacancies. It is profit sharing or profit-sharing.
This type of incentive aims to promote worker recognition and reward based on the achievement of predetermined goals. With this, it seeks to raise the level of performance of each employee or team.
In short, PLR is a form of variable remuneration to the organization’s financial results. In this way, each employee can receive different amounts related to delivering results and achieving objectives.
It is important to note that a company that uses PLR linked to a variable remuneration program is obliged to extend the benefit to all its employees. However, each employee can receive different amounts if the program counts on differentiation by position, level of the hierarchy, or achievement of goals.
How does it work in practice?
The first step is the agreement of rules between the company and its employees. A company with no employee committee can elect a specific committee to discuss the PLR rules with senior management.
Thus, payment rules will be defined as the minimum and maximum amount if there will be differentiation by hierarchical level, position, and collective or individual results.
Therefore, the most important thing is that employees are clear that profit sharing is not a salary. Its receipt must link to a target contract that can be individual or sectorial.
Here, it is necessary to pay close attention to the proposed goals. These goals must be challenging; after all, the purpose of PLR is to promote business growth and reward employees for it.
However, these goals need to be achievable. Otherwise, the effect could be the opposite, and instead of encouraging employees, it could make them unmotivated, even increasing the company’s turnover rates.
Therefore, besides establishing achievable goals, it is necessary to provide the materials and resources needed to achieve these goals.
How to establish rules for the PLR?
Just as goals need to be achievable, rules need to be precise. Thus, the rules can link to productivity, quality of work, and absenteeism rates.
To establish rules, the staff committee and top management must find a balance between the organization’s growth needs and the reality of the work team.
After all, it will be necessary to offer the team conditions that favor their work to reach the goals. Therefore, the offer of a variable remuneration such as the PLR needs to consider other processes that will guarantee the result of the program and its proper application.
Among these processes, we can highlight performance evaluations and training and talent development programs. So, here comes the action of HR, offering monitoring tools, which ensure that employees prepare to meet the goals and, soon, will reward for doing so.
Therefore, the application of variable remuneration will fulfill its macro objective; which is nothing more than raising the level of performance of employees, increasing the organization’s financial gain; and rewarding employees for their commitment and delivery.
And how is the PLR calculated?
There is no pre-defined calculation formula. Also, because this is an issue that must be agreed upon between the company and employees; payment can be linked to individual results and department or team results.
In this way, each company will negotiate with its employees the payment of this variable remuneration and link it to the index that makes the most sense for both of them.
However, one way to calculate the amounts to pay by each employee, after calculating the organization’s results, is through HR software that offers a platform for this.
Thinking about it, how about getting to know the SER HCM? Our people management solution has a compensation module, which will help your human resources sector measure the correct values, taking your team’s results into account.
Do you want to meet SER? Contact us. In addition to the compensation module, we have several solutions to make your HR more strategic and boost your company’s people management.
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