Bonus Plans

Caroll · September 2006

Hi my name is Carol and I'm new to the Employers Forum. I am the HR Director for a mortgage banker in California. We are in the process of instituting a bonus plan for all our employees. My boss has in mind a "pay for performance" kind of arrangement. This would include sales as well as administrative. Does anyone have an annual or semi-annual bonus plan they could share with me. He's got some really far out ideas that I know won't fly with the staff so I really need some help in being fair and equitable with this plan.

Thanks so much for any assistance you can give.
Carol

Paul in Cannon Beach · September 2006

Hi Carol,

Welcome to the forum. You will get some great advice and camraderie here. Hopefully one of the forum administrators will move your post to the general employment or wage and hour section where you will get more responses.

Paul

Caroll · September 2006

Thanks Paul - hopefully they will - where did I post this? I thought I was in the main forum, but guess not huh?

Carol

ray a · September 2006

Hi Carol. Here is what we do as an electronics manufacturer. Every quarter we rank all employees by department and this ranking is used for several purposes. One is bonus distribution. We then simply divide each department into 3rds, top, middle and bottom. Those falling in the top third get the largest bonus, in the middle a little bit less and the bottom dwellers get the least. Those who were hired during the year get a pro-rated amount based on which 3rd they are in. Relatively simple.

Caroll · September 2006

Thanks Ray - sounds easy enough ~ probably too easy for my complicated boss.

owenlady · September 2006

Glad to see you here!

We have a very simplistic bonus plan:

1) If the company does not make a profit no one including our CEO can expect any type of bonus.

2) We have a set amount for each of these categories: Officers, Directors, Supervisors, Everyone else

3) If you are employed at the time of bonus payout you receive your flat amount. I campaigned with Sr. Management and won! that if an employee's manager had not considered them to be such a bad performer that they had taken disciplinary steps to terminate the employment, then they too should receive the bonus.

4) Employees, Supervisors, Directors who have not been here the entire year are pro-rated by the # of months they've worked.

Easy to administer and very effective!

Good luck.

Caroll · September 2006

Thanks so much for your input - this really helps.

Carol

Dutch2 · September 2006

Our program is based on the company exceeding the budget NET numbers and each employee is assigned at least four goals to attain during the year. We have three goals. First goal is equal to 2 weeks pay, second is 3 weeks, and third is equal to 4 weeks pay. Each ee must meet 100% of each goal to receive credit for same. If the ee attains 100% of their goals and we reach the first goal the ee receives pay for an additional two weeks of work. If ee makes 50%of their goal they receive pay equal to one week and etc. The best part for the ee's is that if the company does not reach their goal and the ee still attains their goals they receive 75% of one weeks pay. So even if the company does not reach it's goal the ee's can still receive their "incentive" pay at the end of the year. This last option does not apply to Sr. Mgmt.

mwild31 · September 2006

Hi Carol - welcome to the forum. We have a quarterly profit sharing plan that is based on the amount of profit we received, the employee's longevity and their base pay.

Are you sure your boss is looking for a bonus program? When someone says "pay for performance" they are typically referring to a skill pay program...

System · September 2006

I'm a firm beleiver in the approach of paying bonuses out on a monthly basis, quarterly at the very least. Annual bonuses tend to lose the "incentive" factor because its only a once a year phenomonon that makes it difficult for employees to pay much attention to it until bonus time approaches. By paying bonuses out monthly, you get employees tied to the day-to-day operations of the businsess and they see rather immediate results of keeping the busness on track each month. The factor that should be used to determine bonus payment is obviously profitability - if the organization exceeds it breakeven point, pay out a portion of that excess to the employees. I don't want to make it sound like this is the only way to construct a bonus plan, as other forumites obviously have alternative approaches that must be sucessful. However, I've been involved with quite a few and from my viewpoint, the monthly "profit share" is the most effective way to get employees connected to the financial performance of the business and the best way to encourage behavior that enhances the bottom line. Its also pretty simple to claculate and distribute.

Bonus Plans

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