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Component Manufacturing dverti$er
Don’t Forget! You Saw it in the
The Thomas McAnally Publisher
Adverti$er
August 2019 #11241 Page #80
Hiring Zone
Bonus Plan or Performance Plan Is One Strategy Better?
he goal is the same for both a bonus plan and a performance plan—reward an employee for performance. The higher the position, the more defined are the goals. Not many bonuses that are consistently over $10k are subjective. It can’t be about how well departments out of your control did or how that affects the mood of the boss. It must be very objective and measurable. It must be consistent year over year to build trust. That is why more companies are structuring compensation with an integral performance component, along with a Standards of Performance to measure results and give reliable expectations to employees.
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In essence, the process works this way. The Standards of Performance (SOP), what the company expects of you to be considered satisfactory performance, is defined at the beginning of the year. This amount is your base and this amount is your performance package. If you do x, y, and z, your job performance is satisfactory, and your compensation is as expected. Not a stretch, or reaching for the sky, only a defined performance for the position that is acceptable. Employee and manager both need to sign off on the package. Quarterly reviews are needed to keep people focused, followed by a year-end final review that determines if you met your SOP.
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