Many companies use a system of bonus payments to employees as a way to reward good performance and to motivate employees to stay focused on company goals. When companies approach me for for assistance in establishing or reviewing a bonus system, there are several guidelines that I follow in setting up a system that will produce the best results.
The first criterion is to identify the positive behavior that you want employees to exhibit. I’ve found it is easier to reward good behavior than to simple punish unacceptable behavior. Emphasizing the positive rather than the negative sets a better tone to the company’s attitude. You should include in the bonus plan those employees whose behavior will bring the desired result. Don’t attempt to include employees that are not contributing to the desired goal.
The second criterion for a bonus system is how to measure the desired behavior. It has to be clear, unambiguous and transparent. Ideally, it should be something the individual worker can monitor for himself. This will enable the worker to directly see the benefits to himself of his behavior. It should also be easy to assemble the data to show the results. If it becomes too complex or cumbersome to show performance both the workers and management will grow tired of the plan.
The third criterion is to make the measurement and performance goals public and clear to all employees with a score board. I recommend posting the goals and the daily or weekly performance to the goal where employees can see it. Allow them to see in each time period where they stand in relation to the goal. If they are performing below the goal they should know it in enough time to correct their behavior. The analogy should be a football or baseball score board. You see the results of each quarter or inning immediately. The same visibility should be given to the bonus scoreboard.
The bonus system should be compatible with corporate goals. When a worker achieves his bonus, his behavior should contribute to improving the overall corporate performance. Although this criterion sounds obvious, I’ve seen many instances where it is overlooked by senior management.
The rewards in the bonus system should be meaningful to the workers. If money is the reward each payment should be large enough to get attention. There are many situations in which money is important to the worker. However, rewards such as extra time off, a preferred parking space, a gift certificate or special recognition in front of co-workers can be powerful motivators for desired behavior. If you are not sure how to reward for desired behavior, ask your workers what they would like. You may be pleasantly surprised at their response.
Don’t be afraid to change the rewards if you are not getting the desired response. Changing the rewards, rather than scrapping the entire system, will demonstrate to your work force that you are serious about getting the right behavior.
Finally, if you are committed to implementing a bonus system to reward desired behavior, enlist the advice and assistance of your work force is setting up the bonus system. If they have input in the decision-making, they will more quickly accept ownership and promote the system to their peers.
Let me hear from you about your experiences, both good and bad, with bonus systems you have implemented or considered implementing.
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