Let the good times roll.

Byline: Pooja Kothari

THE NEW thing keeping human resource managers busy this season is the unique way in which corporates are rolling out bonuses to their employees. Simply put, a 'rolling bonus' spreads a performance-related bonus across a time period, as against the prevalent system of giving it out annually.

The Aditya Birla group seems to have got it first, and better than most, right down to formalising it with printed brochures. Put under its value management initiative 'Project Together', the Birla group is giving its 404 senior managers a bonus spread across three years. It has been doing so for directors for two years, and for others like corporate function heads for a year now.

Birla managers are not the only ones. Almost 2,500 employees of the Godrej group, including chairman Adi Godrej himself, are covered under the performance related variable remuneration scheme - the 'declared variable remuneration' is put in a 'bonus bank' for a period of three years. Payments will be made for the first time under the system this April in recognition of last year's performance.

While the Birlas have linked their scheme to the unique concept of 'cash value added' (CVA), the Godrej group has linked its to the Stern & Stewart-promoted economic value added (EVA) concept. The philosophy underlying CVA is the same as that of EVA - businesses must earn above the cost of the capital that is employed. The Birla definition of CVA: 'Gross cash flow minus gross cash invested during the year.'

Explains Santrupt Misra, director, Birla Management Corporation, and the man implementing the scheme: "The system encourages people to think in business terms, rather than 'my unit, my function' terms. It's over and above the individual performance bonus, and is treated as an incentive to encourage long-term thinking." Agrees CK Vaidya, executive director, corporate personnel, Godrej Industries: "By linking it to EVA drivers defined early on, the person is provided with a clear line of sight - how will my action affect the EVA of my business in the long run?"

Both the groups pay a certain percentage of the bonus to the employee in the year it is declared, while the rest is carried forward as the opening balance for the next year. While one-third of the bonus earned is paid out each year at Birla, Group Godrej has decided to pay eighty per cent of the bonus this year and carry the rest forward as opening balance for next year.