Companies who choose to use a bonus to incentivise performance should develop a robust and transparent scheme which encourages the particular behaviours the company values and achieves the results it needs to achieve before any payments are made.
Elements which employers should consider when developing a bonus scheme include:
~ Who to include in the scheme
~ Any differences in award levels
~ Behaviours to be encouraged
~ Bonus levels achievable
~ How to measure performance in an objective way
~ How the bonus scheme fits the corporate strategy and culture
~ How the bonus scheme fits with the company’s reward strategy
~ The views of various stakeholders
How many employers have got it wrong, hard to tell. I have seen situations where badly written bonus plans have wiped out the initial profits of the company! Not a good situation to be in!
Getting a bonus scheme right so that it incentivises and rewards the employee, while benefiting the business can be a combination of art and science. At DOHR we work closely with clients to implement, cost effective, engaging bonus schemes which add real value to the business.