Bonus Plans

pmaher

Does anyone have a good plan on giving bonuses? We are trying to cut costs but seem to have a free hand at giving bonuses. I'd like to recommend a plan to our management so that we have some control.

Thank you.

ThomasG

Ours is really very simple and works well.

Different maximum amounts based on what level of management you are ( i.e
20%, 35%, etc)

Based on sales / profit growth

Example: 35% Maximum

Sales/Profit Growth Bonus Payout
7% 7%
14% 14%
21% 21%
28% 28%
35% 35%

we use gross profit
payout is the lesser of the two - sales growth or profit growth (i.e. if
sales growth was 14% but the profit growth was only 7% we'd pay at the 7% level

Hope this helps

Trinity

We have a simple one as well. It's a profit-sharing bonus. We have a set amount of profit for the year that we want to attain and therefore budget for. (ex. $676,000) If we attain that, then everyone gets 4% of their annual salary. For every $80,000 over that, we get another 1% of our annual salary. We hand the checks out at the Annual Christmas Party, (which means we have to estimate what December's profit will be, but it's not that difficult). Anyway, this has worked really well for us and bascially varies from year to year. We've had as low as 4%, and gone as high as 11%. After the 11% payout, the board opted. to cap the bonus off at 10% of the annual salary, since it was quite a big payout.

Mentel

I am also looking for more info on bonus plans. We give bonuses to just management employees because the rest get either time and one-half overtime or straight time overtime. I would like to have part of it based on overall company performance but I would like to base the rest on individual performance. Any thoughts???