If we assessed positively the prevailing Russian systems of reward and performance appraisal for workers, the similar systems for managers may be described as “chaotic” and arbitrary. At the first glance, the reward system for managers is very similar to that
of workers – there is the same two-tier system of basic salary and premium, as well as a developed system of social benefits (that may include many additional perks as “allowance for mobile phone,” “allowance for education of children,” “special mortgage from the company” etc.). The difference here is the stability of salary. If workers expect stable salary for routine work of satisfactory quality, the take-home wage of managers is never secured. It consists of a permanent part (not related to performance) and a variable part, depending on performance appraisal. For production units, engineering, IT or HR functions the variable part is usually set at 20-40% of take-home pay. For sales (installation) department the variable part may be 50-70% of take-home pay. The real problem here is not the relative size of the variable part, but the performance measures that determine it. For traditional functions, like production and engineering, fulfillment of a monthly plan or timely delivery of an order is usually the sole measure of performance. Thus, the plans themselves are set as low as possible; orders are scheduled at the last accepted period. In addition, the direct costs of such an achievement are rarely taken into consideration, as production and engineering are kept as far as possible from
finance and “real money.