Bonus Schemes

An effective tool in driving business objectives or simply an expensive add on?

Much in the news for the wrong reasons of late, well designed bonus schemes can still be an effective way for some organisations to drive business goals on a personal, team and/or corporate level. However, many companies are not realising a return on their investment due to the current design of their schemes and the way in which they are communicated.

The questions that need answers are:

• Is a bonus scheme the right approach for us?
• If so, what % of the salary pot should we spend on fixed (basic) versus variable pay (bonus)?
• How should it be structured?

For organisations that decide to go ahead there needs to be clarity in the target setting process, what part each colleague can play in achieving these targets and how the bonus will be calculated. It is what reward professionals call a clear “Line of Sight”. A weakness in any part of this process will undermine the effectiveness of the whole scheme.

Furthermore, having set targets regular and transparent communication on progress against these targets will help build colleague trust and develop a better understanding of the link between pay and performance. Bonus therefore becomes something to be earned rather than expected.

As experts in bonus scheme design, CELRE consultants can help create schemes that are well thought through, expertly communicated and ultimately deliver the objectives they are set out to achieve.