You can add in additional criteria and metrics to help with this process over time. For most roles, however, it is nearly impossible to have a calculation that spits out the right distribution in both good times and bad.
Programs that unite everyone around a single pool of money will tend to work better. If you have a village and a single farm, everyone will share when the crops are good. When the crops are bad, everyone still shares. Too many times, we distance people from that simple reality.
Think about a percentage of pretax profits or some other bonus pool calculation that makes sense. Don’t start too high. It is easier to improve an incentive pool than it is to lower it.
Consider adding in “windfall” caps at some point to the program. When grain crops are exceptionally good, we store some for the inevitable bad times.
Consider that if your top management does not have the ability to sit together and openly discuss performance and setting relative bonus amounts for each person they are managing, there are likely deeper trust issues.
Consider that if something “feels” wrong in your gut about the distributed amounts to an individual, to deeply dig into the topic with rigorous discussion.
In this video series, Courtney Stearns, Sue Weiler-Doke, and David Brown discuss the most common questions we get from contractors about incentive programs, including a bunch of great questions from the audience.
This is Part 14 of a 20-Part Series
Topics Covered in the Series Include:
- Union vs Open
- Types of Programs
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