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Quarterly Bonus Incentive Programs
Benefits & Compensation
Quarterly Bonus Incentive Programs
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
We are a manufacturing company with under 100 employees. We are in the process of giving annual reviews to all our employees. We typically give raises at this time, but with the unpredictable market o
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Forums » Topic Forums » Benefits & Compensation » Quarterly Bonus Incentive Programs
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Quarterly Bonus Incentive Programs
posted at 4/29/2010 11:25 AM EDT
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Posts: 11
First: 9/23/2008 Last: 9/14/2010 |
We are a manufacturing company with under 100 employees. We are in the process of giving annual reviews to all our employees. We typically give raises at this time, but with the unpredictable market of our business we wanted to try something different this year. We are trying to set up a Incentive Program and give Quarterly Bonuses based on many attributes. Does any one have a similar program that they could share with me? We have office staff and skilled worker. The skilled workers performance can be more easily graded than the office staff. Any suggestions? |
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Quarterly Bonus Incentive Programs
posted at 4/29/2010 2:49 PM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
I did one several years ago for a manufacturing company and it was a huge success.
Simple measures with a clear line of sight for employees is key. "Many attributes" is a bad idea for any number of reasons, but the biggest one is that bonus awards might be considered to be capricious by the employees. By all means keep it simple! The plan was based on one simple metric - profit before tax. For every 2% increase in PBT we paid 1% in bonus to the employees. For PBT below 80% of quarterly target, there was no bonus. Bonus started accruing at the 80% threshold and increased at the 2:1 ratio without a cap. There was an immediate increase in productivity. We installed a "United Way" type of goal thermometer in the lunch room. We updated that at all employee meetings every other Friday. Needless to say, the employees really got into it - especially on those Fridays when we passed the 80% PBT mark. We also found that we could achieve immediate impact on manufacturing problems by highlighting one particular issue at these meetings. One in particular was quite remarkable - our scrap rate was running about 12%. Once we pointed that out and what each employee could do to help reduce that (AND what the impact was on profitability), the scrap rate dropped the following week to less than 2%. So design a good simple plan. And communicate it clearly! Use it as a communications tool to better manage your business. |
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Quarterly Bonus Incentive Programs
posted at 4/30/2010 10:36 AM EDT
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Posts: 11
First: 9/23/2008 Last: 9/14/2010 |
Thanks for the information and that sounds like a good place to start.
We are wanting to grade each employee in certain aspects of their work to determine their bonus. We are trying to determine the catagories to use, such as, years of employment, attendance, productivity, etc. Each catagory would account for a certain percent of their bonus. |
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Quarterly Bonus Incentive Programs
posted at 5/1/2010 5:12 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
Sounds like a number of variables going on there.
I would deal with attendance where it should be dealt with; eg, through whatever disciplinary process you have in place. Productivity starts getting a bit subjective and my first instinct is to avoid going there. You might also find that instead of people working together if you use this metric, people might start working for their own gain. Money is a strong incentive for behaviors - make sure you only get positive benefit from it! If you must include a tenure measure, keep it simple and objective. As an example, someone with 2 years or less gets 8% bonus eligibility; someone with 2 to 5 gets 10%. Too many measures can result in an administrative nightmare - and that's probably the last thing you want. |
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Quarterly Bonus Incentive Programs
posted at 5/3/2010 5:46 AM EDT
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Posts: 544
First: 9/27/2004 Last: 9/13/2011 |
I agree, keep it simple and transparent.
And look at all the variables. I once worked for a company that short-paid a production bonus because the customer couldn't pay for the order. It was demoralizing. |
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Quarterly Bonus Incentive Programs
posted at 5/4/2010 11:51 PM EDT
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Posts: 1
First: 5/4/2010 Last: 5/4/2010 |
I have recently switched from a profit-sharing scheme to a bi-annual bonus scheme. We are a trading company.
The new scheme is as follows: 1) 1.5 x monthly basic salary - if total company gross sales is between 100-120% and employee individual goals of 80% /> 2) 1 x monthly basic salary - if total company gross sales is between 80-99% and employee individual goals of 80% /> 3) No bonus if company gross sales and employee goals <80%. |
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