In today’s competitive environment finding and retaining top talent is a key to business success. Developing and implementing a bonus plan that is in alignment with your business goals can be a powerful aid in keeping those high performers on your team.
Keys To an Effective Bonus Plan
- One of the ways your team will know it is valued is that they will be paid well. But they should know they are valued in lots of other ways too. Be creative and don’t just use money. For example, time off and public recognition can be valued incentives too.
- An effective incentive plan gives everyone a sense of ownership so that when the business succeeds, they succeed.
- Be sure to reward the activities you want to see happen. You will get what you reward. Align your incentive plan with your business goals.
- Design rewards around activities within the team member’s span of control. Incentives should be different for an outside sales force compared to a welder on the manufacturing floor.
- Make sure that the cash flows generated adequately support the bonus payout. Budget and plan to make sure that bonus payouts don’t create a cash crunch.
- Create a good balance between current cash payouts and longer-term incentives. In every good bonus plan there is a balance between ‘show me the money’ and the longer term view.
The first step in any well designed bonus plan is a clear definition of business goals. When your compensation systems are aligned with your goals, not only will you attract and retain quality team members, but they will perform at their highest potential. If I can be of assistance in developing or modifying your bonus plans, or in any of your budgeting and planning processes please contact me.