Targeted bonuses
Posted: Sun Jan 19, 2025 5:40 am
Performance-based pay is the title of one of the most well-known guidelines on pay systems in the United States. This document was edited by Peter Chingos, who was the head of the New York office of Mercer Human Resource Consulting. Despite the variety of approaches to bonus systems, the key task of the variable part of the salary remains to stimulate the achievement of specific goals and the fulfillment or even exceeding of plans.
The main advantage of the target bonus method is its flexibility. For example, if one of the company's areas of work does not achieve the expected results, you can simply set an additional target task, the fulfillment of which will affect the size of the bonus.
However, the flexibility india car owner data package of pay-for-performance systems can also have negative aspects: many of them can be too complex and fragmented. For example, if a bonus is awarded only for exceeding planned targets, this can lead to a lack of attention to such factors of labor efficiency as the quality of work or savings on materials. The main thing when developing a pay-for-performance system is to avoid “irresponsible zones” – areas that require improvement, but for which no one is responsible. These zones can be present in many companies and require special attention.
Case: VT-metall
Find out how we reduced the cost of attracting an application by 13 times for a metalworking company in Moscow
Find out how
Pros and cons of each bonus scheme
Current activity bonus:
Pros: This system is easy to calculate and effective for monitoring the work of entry-level personnel. It is suitable for employees whose work does not have a direct impact on the company's financial performance.
Cons: Insufficient incentives for employees working in profit centers, where their performance affects the company's income.
Design schemes:
Pros: They are visual and logical, making them easy to use. Particularly suitable for project teams and managers.
Disadvantages: Limited scope of application – effective only for project activities.
Bonus system:
Pros: Link individual rewards to the overall company's performance, making them visible. They are suitable for stimulating group work.
Disadvantages: Low efficiency and difficulty in assessing the contribution of each specialist.
Loyalty rewards:
Pros: This system helps to create a sense of commitment to the company among its employees.
Cons: Can become vague and less motivating due to lack of strict calculation principles.
Targeted bonus based on results:
Pros: These schemes ensure that pay matches the achievements of each employee and effectively motivate specialists who work for results.
Disadvantages: The development and implementation of these systems is a rather complex and costly process.
Pros and cons of each bonus scheme
In general, companies in Russia use multi-component special remuneration schemes, which allows them to be adapted to different categories of employees. For example, accountants and loaders can be provided with a system of bonuses for current activities, while top management can be provided with bonus schemes or for achieving specific results.
It is also important to consider what portion of an employee's salary is base and what portion is variable. Those who work for the process should have larger base salaries, while those who work for the result can receive an increased variable portion.
Regulation of the unstable part can be used as a tool to achieve the firm's tactical goals. For example, if the company plans to catch up with competitors, increasing it often stimulates quick results and the achievement of strategic goals.
Recommended articles on this topic:
Lead generation - what is it? Basic methods and how to manage them
Sales Triggers That Have Never Failed
Company Marketing Plan: Short and Detailed Versions
The main advantage of the target bonus method is its flexibility. For example, if one of the company's areas of work does not achieve the expected results, you can simply set an additional target task, the fulfillment of which will affect the size of the bonus.
However, the flexibility india car owner data package of pay-for-performance systems can also have negative aspects: many of them can be too complex and fragmented. For example, if a bonus is awarded only for exceeding planned targets, this can lead to a lack of attention to such factors of labor efficiency as the quality of work or savings on materials. The main thing when developing a pay-for-performance system is to avoid “irresponsible zones” – areas that require improvement, but for which no one is responsible. These zones can be present in many companies and require special attention.
Case: VT-metall
Find out how we reduced the cost of attracting an application by 13 times for a metalworking company in Moscow
Find out how
Pros and cons of each bonus scheme
Current activity bonus:
Pros: This system is easy to calculate and effective for monitoring the work of entry-level personnel. It is suitable for employees whose work does not have a direct impact on the company's financial performance.
Cons: Insufficient incentives for employees working in profit centers, where their performance affects the company's income.
Design schemes:
Pros: They are visual and logical, making them easy to use. Particularly suitable for project teams and managers.
Disadvantages: Limited scope of application – effective only for project activities.
Bonus system:
Pros: Link individual rewards to the overall company's performance, making them visible. They are suitable for stimulating group work.
Disadvantages: Low efficiency and difficulty in assessing the contribution of each specialist.
Loyalty rewards:
Pros: This system helps to create a sense of commitment to the company among its employees.
Cons: Can become vague and less motivating due to lack of strict calculation principles.
Targeted bonus based on results:
Pros: These schemes ensure that pay matches the achievements of each employee and effectively motivate specialists who work for results.
Disadvantages: The development and implementation of these systems is a rather complex and costly process.
Pros and cons of each bonus scheme
In general, companies in Russia use multi-component special remuneration schemes, which allows them to be adapted to different categories of employees. For example, accountants and loaders can be provided with a system of bonuses for current activities, while top management can be provided with bonus schemes or for achieving specific results.
It is also important to consider what portion of an employee's salary is base and what portion is variable. Those who work for the process should have larger base salaries, while those who work for the result can receive an increased variable portion.
Regulation of the unstable part can be used as a tool to achieve the firm's tactical goals. For example, if the company plans to catch up with competitors, increasing it often stimulates quick results and the achievement of strategic goals.
Recommended articles on this topic:
Lead generation - what is it? Basic methods and how to manage them
Sales Triggers That Have Never Failed
Company Marketing Plan: Short and Detailed Versions