Bonus Programs

swynia

My boss is very big into bonus / incentive programs. He would rather give somebody a smaller salary and then be able to give them a big bonus once a year instead.

I do not know alot about how a bonus plan should be structured or what kinds of things should be considered as you are writing one up and sending it out. I have examples of past plans at my company, but they were mostly based on 'if you stay, you get some percentage of your salary as a bonus'. I don't like it and feel that there is a much better way that this can be done.

I'm looking for ideas on what other companies use as criteria or considerations when working on a bonus program either for an individual manager or a group of people.

Do you have any insight??

Thanks!

SMace

There is a great article in the 5/1 Newsweek about Nucor. They have it figured out. Keep in mind it is very complex and took a lot of time and money to develop.

IMHO developing a "bad" bonus system is worse thatn not having one. If you are going to do it, do it right.


I would need to know what you do to give any useable ideas.

swynia

We are a trucking company that repairs and maintains trailers that we pull and stores the empty trailers for our customers. Our divisions are seperated into two parts, 1-trucking, 2- maintenance & repair and storage.

I hope that additional information helps.

Paul in Cannon Beach

Are you thinking that you would create a bonus structure based on performance, longevity, attendance, etc?

Whatever you come up with, it should be objective and well documented to avoid morale problems.

I would avoid bonuses that are given out at the discretion of the supervisor.

POTATO

I "suffer" with the same problem of "year-end bonus" syndrome. I am sharing this caution because I came upon it a couple of years ago - I believe (PLEASE someone correct me if I am wrong) that if you have non-exempt/hourly employees and you base their bonuses on hours worked or attendance, when paying a bonus you must consider their overtime and adjust the bonus according to their reg/ot rates..sometimes this bit of information helps management "reconsider" the year-end bonus deal. Hope you have better luck than I do!!!

Open1

When I started here, I was trying to fit a monthly bonus system into a bi-weekly payroll... It didn't work, and the system wasn't motivating anyone anyway.

There is a confusing distinction between a "discretionary" and "non-discretionary" bonus. Christmas bonuses are non-discretionary, so you don't have to worry about hours worked and recalculating OT rates for the year, but other bonuses based on the work are a different story. My sympathies are with Potato!

I believe we are looking at new incentive systems, so that article might come in very handy. Thanks!