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incentive for engineers
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incentive for engineers
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Engineer incentive
Could you share your engineering group’s incentive plan?
My company has an incentive plan that is paid out quarterly and is tied into the sales revenue of the quarter.
We
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Forums » Topic Forums » Benefits & Compensation » incentive for engineers
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incentive for engineers
posted at 9/23/2008 4:04 PM EDT
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Posts: 40
First: 8/14/2002 Last: 9/26/2008 |
Engineer incentive
Could you share your engineering group’s incentive plan? My company has an incentive plan that is paid out quarterly and is tied into the sales revenue of the quarter. We recently acquired an engineering group and they are on the same plan. The plan is very simple: individual MBO X %sales revenue achieved. The head of engineering is complaining that engineers should be exempt from sales revenue and that their incentive should be purely based on their MBO. Could you please comment on this? Why the engineers should be exempt from company’s performance? Thanks, -C |
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incentive for engineers
posted at 9/23/2008 5:11 PM EDT
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Posts: 3870
First: 2/12/2002 Last: 11/2/2009 |
Are these sales engineers (eg supporting the sales effort) or development engineers? Do they participate in the sales process in any way?
Are you referring to "sales revenues" as the amount of booked sales, or are you referring to actual corporate revenues? |
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incentive for engineers
posted at 9/24/2008 7:43 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
Engineers bonuses should not be exempt from company performance but.............. tieing it to quarterly SALES would be unfair.
Here is one solution. The company should have a net income (not sales) goal that is a threshold hurdle. If the net income FOR THE YEAR is below the threshold then no bonuses for engineers. If net incomeis above the threshold then pay based on the MBO scoring. |
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incentive for engineers
posted at 9/24/2008 9:08 AM EDT
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Posts: 40
First: 8/14/2002 Last: 9/26/2008 |
Thanks for your replies...
They are not sales engineers. They are design engineers (R&D only) They don't participate in sales in anyway. My company's revenue comes from sales of our products. We don't have any other source of income. Our business model is such that the company is always profitable as we buy our products from the parent company. So we can't go by the net profit. |
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incentive for engineers
posted at 9/26/2008 8:03 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
Ok Lets get back to basics. The reason that bonuses should be paid is that the person is accomplishing tasks that are not part of the regular day to day job.
Have you reviewed these MBO items and do they fit the criteria above? Second what is the reason that the bonuses are currently tied to the quarterly sales revenue? If the company is always making money and these are R&D types the manager is likely correct. However.... it is hard to see how R&D types can be making a contribution to the quarterly profits or revenues It is also hard to imagine quarterly goals that are not part of the basic job. |
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incentive for engineers
posted at 9/26/2008 9:26 AM EDT
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Posts: 40
First: 8/14/2002 Last: 9/26/2008 |
Howard7,
Thanks for your comments. My company is always making money due to the business model. We have to look at the parent companys bottom line for total net profit. However, our bonus structure is totally different from the parent company. It is more complicated then I can explain in a few sentences. And that is why we look at the sales revenue achieved each quarter to payout the bonus rather than the net profit. Although the engineers do not directly contribute to the quarterly sales revenue, we have to consider the net profit of the company when paying out bonuses. Do you have any suggestion in how to tie in engineers bonus to companys performance? |
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incentive for engineers
posted at 9/27/2008 5:00 PM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
I suggest you first go read or reread the job descriptions. Do they describe tasks that have measurable deliverables?
Assuming it does you need to measure the deliverables in terms of quality and quantity. The quality and quantity you define should be the normal deliverables when the person is working at a fully satisfactory level. Now you need to determine what is stretch deliverables compared to the deliverables above. Now you have something to set as a target. In addition to "scientific" deliverables there may also be budget, safety, and other deliverables. |
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