QPLC – Friend of the Foe

Oh … For those who don’t know what QPLC is, I’ll take a minute to explain:

QPLC is Diapro’s way of NOT giving some part of an employee’s salary every month.

Diapro is headed by this guy called Hakim Kemzi. This gentleman - A white haired chap in his late 60's - happens to be a die-hard “kanjoose” (who claims to be austere in all aspects of life), and obviously, wants to reduce the salary paid to employees every month.

That’s when the whole QPLC concept was born. As the name states – Quarterly Performance Linked Performance - the amount will be given once every quarter.

Obviously, not a single soul would agree to have their salaries deferred by a day – leave alone 3 months. This is when the Diapro’s senior management think tanks kick in and say – lets come up with a plan that will make these silly employees think that they stand to gain by letting us keep 10% of their salaries for 3 months and then giving it to them. And hence, the whole “funda” of QPLC was born.

What we were told was, the QPLC is paid based on the performance of your Business Unit (BU) and the company as whole. So, if you’re BU and the company performs well and achieves/over-achieves the targets set for them per quarter, then the pay out % would be done accordingly, i.e. if target achieved was 110% planned, then the QPLC component would be 110% of the amount mentioned in the offer letter. It was a wonderful proposition, given the IT scenario in India in 2005 where companies were raking in multi-million deals by the hour!

But still, this raises the question – what if they don’t perform as per expectations. Well … the senior management – thanks to their MBA’s from IIM’s and Stanford and Harvard et al – had already anticipated that question. And their answer, QPLC is assured at 100 %. So even in the event that Diapro doesn’t perform as per planned, you will still get the amount mentioned in your offer letters.

You see, the average IT professional is a complete Dodo/Simpleton when it comes to financial planning. Their only aim is to secure a job, work like a donkey, make their bosses happy, and come home with a pay package that would give them a comfortable lifestyle.

Tell them about – stocks, commodities, Forex speculation etc and the sort of money that you can make out of it, and they’ll think you’re trying to siphon them off their hard earned money!!!

To such an innocent soul, a policy like QPLC which gives you an assured 100% and a potential upside was a gold mine!

And they gladly agree (agree would be an understatement – I think fascinated would be a more apt term) to the same.

Well… All I can say is - Poor souls!

Given the sort of complexity these think tanks have given the formula - to calculate the percentage for the final QPLC percentage figure - it was almost certain that not even a single person would ever get more than the assured 100%.

(And to add to the agony, the documentation that they have on the factors that result in the final figure is by no means clear and straight forward, thereby adding an essence of enigma to the equation. This leaves the ordinary person thinking – “This is beyond my understanding … I’m sure such a big company won’t cheat me and the other 50,000 employees who work here! So … Lets just leave it at that!”)

Oh … Before I forget, let me give you the information I got out of one of my HR friends at Diapro - who after countless and relentless nagging from my end told me how QPLC was calculated:

Supposedly, it’s a 50 – 50 split where 50 % is contributed by the performance of the BU, and the remaining 50 % is based on performance of Diapro as a whole.

Eg: If Diapro’s performance was 150% projected, and the BU’s (say Retail) was 180%, then the QPLC would be = ( 75 + 90 ) = 165%

In the event that either of these two entities did not meet the specified targets, the QPLC would be the assured amount only.

Eg: If Diapro’s performance was 250%, and the BU’s (say Telecom) was 99.98%, then the QPLC would be = 100%

So, in purely mathematical terms, there was a ½ chance that each of the entities would be over target. And since it is a combination event, the probability of ending up with a scenario where the actual performance is more than the projected performance = ½ * ½ = ¼

So, even from a mathematical perspective, the management knew that for even 1 time that they would have to pay more than 100%, there were 3 times when they would have to pay only the assured 100%.

What else could they ask for?

And hence, the policy was rolled out. And the employees, innocent (or foolish) as they were, thought of it as the next best thing that could happen to them, and embraced the QPLC with open arms!

And for those who didn’t want to? Well … you didn’t have a choice. You either sign on the dotted lines that say you accept this sort of a pay-stack, or you can go to another company.

That’s one of the reasons why I signed the stupid contract!!! More like – That’s the ONLY reason I signed the contract and the bond as well!!!