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A good, fair and well-designed bonus scheme can be a perfect way to increase your staff’s productivity and so your bottom line. If you decide to set one up, what do you need to consider? We look at all the details here.

When designing your scheme the first thing you have to consider is why you want one. Consider the reason you want to introduce one:

When you understand what you want to achieve then consider what factors the bonus scheme should be based on:

Bonus Schemes can be single-factor or multi-factor. A single factor scheme will focus on one specific goal, e.g. an individual employee achieving more sales. A multi-factor scheme includes other goals and is multi-layered (but don’t make it too complicated!).

Be careful with your contractors, as you may muddy their employment status by including them in an employee bonus scheme.

Bonus scheme structure

How will you measure performance? Make sure you document your criteria so everyone is clear. Make realistic goals / objectives / triggers to be reached, which can be adjusted over time.

If the bonus has a target of new sales then give staff their own targets to reach and the bonus will only be paid if he / she reaches them (a certain sales figure).

To devise an effective scheme you need to understand the employee’s activities and what is involved. You then need to agree with them how their performance is going to be measured.

Don’t set targets that are too easy to achieve, or on the other hand impossible to achieve.

Consider also what timescale you want to have for you staff to earn the bonus.