February 17, 2009 at 9:37 am
I've been assigned to a team that's reviewing the Incentive pay where I work.
As with most companies, our sales people are given a bonus/incentive pay for selling. These are easy to quantify and their sales to in fact help the company.
So now they want to explore the ability to give non-sales people some type of bonus or incentive pay. But they don't want it tied to the company performance. They want it to use it to really reward the high-achieving staff members.
We have several depoartments that this would impact. IT, Accounting, Finance, Marketing (non-sales), HR....
What's difficult is determining how. In IT, many of the tasks we perform are project driven. So we can attach a dollar amount to that project and that's the incentive it would pay when it's complete. But the project could involve 3 or 4 people, all contributing a different amount. What's fair in determining who gets what?
So - my question. Do any of you work in a place that has some type of bonus or incentive pay that's not tied to company performance, but is intended to reward the high performers? Do you have any type of bonus or incentive plan at all? Or are most of the IT jobs based on salary?
Thanks,
Steve
February 18, 2009 at 6:49 am
Ours is tied to company performance. They make a series of predictions at the beginning of the year. Depending on how well we do versus the predictions, we get a bonus tied to a percentage of our salary. I like the idea that if the company does well, everyone does well, and tieing it to your salary more or less makes it so top performers get a bit more. It seems to work as an incentive plan without causing a great deal of friction.
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February 18, 2009 at 2:23 pm
There are a lot of writings on this, and you could really overthink it, but here are a few thoughts:
- giving bonuses for individuals that are high performers weakens the team. It creates a "I'll do what is best for me" even if that doesn't help the company.
- I think you ought to have a couple items in there, one for a team/project and one based on company performance.
http://www.computereconomics.com/article.cfm?id=1403
http://findarticles.com/p/articles/mi_m3495/is_n4_v40/ai_16792789
February 19, 2009 at 10:14 am
My former employer gave out bonus and it was tied to company performance and my own performance (annual review).
February 19, 2009 at 10:43 am
Thanks to those of you who replied.
June 21, 2010 at 11:05 am
Ours is a combination
Job has a base bonus -J (0.5-1.5)
Job Performance is rated -P (0.0-1.5)
Company Performance is rated -C (0.0-1.5)
Formula is:
Base Pay * J * P * C = $BONUS
June 21, 2010 at 11:20 am
So your absolute max bonus is about 8.4 days worth of pay?.. doesn't sound like much.. .tho it's better than 0 days of bonus ;-).
June 22, 2010 at 9:54 am
I posted before, but I'd take a look at this book: Drive
and check out this short video: http://www.youtube.com/watch?v=u6XAPnuFjJc&feature=player_embedded
It has been shown that incentives for creative people, like IT, results in worse performance. I think you might be better off having them give out better equipment, or even unexpected, random bonuses for good work rather than setting up incentives.
I'm about halfway through the book. It makes some great points. I'd consider 30" monitors for developers and other perks instead of bonuses. That's if you are paying competitively. If you are paying well, do something else.
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