Keep Them Hungry: Innovative Bonus Plans for your Best Employees
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Free Download - Want to Boost Technology Sales? Incent Your Support Staff By Kendra Lee |
Even amid talk of an "economic slowdown," the job market appears quite healthy heading into 2007. And the competition for seasoned sales and management experts remains high. Translation: Retaining your best employees could become increasingly difficult in the year ahead. What's a VAR to do? Many will surely consider bonus plans for their best performers.
Bonus plans remain a popular way for companies to accomplish a number of goals, including meeting sales quotas, recruiting and retaining valuable people, motivating employees and ensuring the overall financial viability of a company. A number of compensation strategies exist that will help solution providers maintain a strong and motivated workforce and enhance their bottom-line.
Retention Bonuses
Retention bonuses are one way to maintain the workforce a solution provider wants. Since these types of bonuses are non-salary based, a solution provider can establish a bonus plan based on a person's overall value to the organization. These types of bonuses are often implemented as a way to keep the competition from recruiting and hiring a company's best employees, and maintain a strong management team across the nation. Retention bonuses are especially effective during time of change, mergers and acquisitions, corporate restructuring and relocations.
While retention bonuses are effective for executives and management, they are not as common for salespeople. Sales bonuses are based on commissions. If a sales plan is well written, key sales people will earn large commissions, effectively causing the same desired result as a retention bonus. Typically you don't want to retain sales people who don't perform, and a good commission plan will help weed out the weak.
Project Completion Bonuses
This is an increasingly popular bonus plan, paid to team participants who are assigned to specific projects. This type of bonus may be comprised of 5 to 20 percent of a person's total compensation related to a specific project, and are generally short term (over the course of three to six months). By defining quantitative goals from a project's start, with fixed bonus amounts set based on the importance of an individual's role in the project, bonuses can be paid based on the success of the project and the customer's satisfaction. Since goals are well defined, there is no room for debate once the project is completed.
MBO Bonuses
Management by objective (MBO) bonuses provide solution providers with a way to complete internal projects that risk becoming neglected or overlooked as employees focus on client work. Effective MBO bonuses are time bound and offered quarterly or semi-annually.
In an MBO scenario, employees receive a list of specific tasks, deliverables, due dates, and a dollar value for completing each assignment based on quarterly company priorities. This makes the structure of an MBO bonus very objective and clear that employees will only receive a bonus if their assigned task is completed. MBOs are built into employees' overall compensation plan with dollar value buckets from which quarterly project assignments are made.
When implementing an MBO bonus, it's important that the assigned tasks can be completed by the employee on his own or with minimal peer reliance. Otherwise, it will be difficult to define how much of the task was completed by the employee assigned. If the employee only partially completes a task, management has to determine what percentage of the MBO to pay. In this situation, the bonus payout becomes subjective, exposing the company to a potential lawsuit if the employee does not agree.
Profit Sharing Bonuses
To help drive the retention of key people, these bonuses require that a person stay on the job for a set amount of time before they receive payment. A percentage of the bonus is paid each year on a pre-designated date, for example, October 1 each year over a 3- to 5-year period.
To determine if a bonus plan should be implemented, a solution provider should first review employees' total compensation packages and also decide if a bonus plan will drive the desired actions and results.
Older and experienced employees are usually conditioned towards receiving bonuses, whereas younger employees tend to value time off and a good 401K savings plan.
After reviewing the compensation package, and understanding the expectations of employees, a solution provider can make the best decision for their team and their company.
Keep Them Hungry Innovative Bonus Plans for your Best Employees - To learn more about this author, visit Kendra Lee's Website.
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Dianne CramptonDianne Crampton is North America's leading authority on team culture. She is an author and professional speaker and president of the leading team culture consultancy, TIGERS Success Series, Inc. Crampton has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down or to subscribe to TIGES Free monthly e-newsleeter go here. Dianne's contribution to the 2010 Pfeiffer Consulting Journal (an imprint of John Wiley and Sons Publishers) entitled TIGERS Hearted Teams is available in November 2009. Her new book TIGERS Among Us: Winning Business Team Cultures And Why They Thrive, Three Creeks Publishing will release in March 2010. To receive publishing discounts, subscribe to the free TigerTracks Newsletter here. - Visit Dianne Crampton's Website |
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