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The way some larger companies do this is by salary * target bonus * bonus multiplier. Where the bonus multiplier is a function of growth ranging from 0-2. The
by stocktech 9y ago
The way some larger companies do this is by salary * target bonus * bonus multiplier. Where the bonus multiplier is a function of growth ranging from 0-2. There's no competition between departments and the increase is meaningful to everyone.
I think this is healthier than a separate plan for each department as then you'll get people questioning the plan and their roles, value, etc.
- brudgers 9y agoStrong ties from salary to bonus can tend to misalign economic interests when it comes to the dirty work that makes a company successful. When the value of the manager's bonus is substantially more than the line worker's the manager has an incentive to push harder than the value of the line worker's bonus to a rational economic agent. The money might be better to put to the company's interest by incentivizing the line worker or improving the efficiency of the line work...by 'better' I mean relative to incentivizing the manager's economic self interests.