Bonus plans that are properly designed and executed promote retention, reward employees for contributions to the organization, and drive behaviors that impact an organization’s bottom line. From the budgeting and finance aspects, bonus plans allow the organization to pay less in fixed payroll costs (lower salaries) and shift some of those payroll dollars to variable expenses based on overall company performance. Too many times, however, we see bonus plans that are poorly designed from the beginning and therefore they create more chaos in the culture or drive behaviors that are not positive for the company. Here are 7 things to consider when designing your bonus plan.
How often will you track and communicate the employee’s actual performance vs. budget? More frequent reporting to them is more effective in promoting behaviors you want; however, if the plan is too complex in design or reporting it may become cumbersome on your team to produce reports timely and too complex for employees to really understand where they stand.
CFO Strategic Partners has helped design hundreds of bonus plans for companies at various stages and across industry lines. A little careful thought and planning in the initial design, and then a disciplined structure of assessing the plan and making changes as warranted can help ensure that the bonus plan increases the bottom line of the organization while promoting retention and making employees feel valued for their contribution. Reach out or See How We Can Help.
Shannon Carbone, CEO of CFO Strategic Partners
Shannon Carbone is the Founder and CEO of CFO Strategic Partners, a financial consulting firm headquartered in Central Florida offering CFO on demand, outsourced CFO, virtual CFO, and comprehensive accounting services for clients with either short-term or long-term needs since 1999.
“Our organization was navigating an intense transition involving our government funding partners and public officials. Without the help of CFOSP, we would have experienced severe financial impacts and certainly lost donor confidence.”
CEO Central Florida Historical Society
“I applaud the stellar support provided by our CFO in embracing and understanding our budget priorities and operations that entail hundreds of financial transactions each month and several millions of dollars in expenditures annually. The nature of our business is very complex, yet your firm did not shy away from the challenge of establishing accounting processes and procedures that will sustain us well into the future.”
Kissimmee Chamber of Commerce, Experience Kissimmee
“…The services they have provided have tripled my bottom line, giving us serious profit levels that have helped fund company growth…”
President, Engineering Firm
“There is no limit to the value of the collective experience that the CFO team brings to the table. Their expertise in debt management, tax reporting, cost of funds, and in-depth analysis has been more than I could have hoped for…”
CEO/President, Hotel Corporation
“Since we began working with CFO Strategic Partners, we’re in the best financial position we’ve ever been in… CFO gives my staff and myself financial peace of mind so we can focus on clients and business at hand.”
CEO, Insurance Agency
“With CFO as our partner, we’re able to see the total picture…. Through their expertise, we’re receiving the highest level of educated financial planning that will propel us into the future.”
President, Florida Architectural Firm