Types of Bonus Schemes
There are several types of bonus schemes you can implement in your organisation. A typical bonus structure would work on an annual or monthly basis.
Individual Bonus Scheme
An individual bonus scheme will set out targets or objectives over a period of 12 months. Bonuses such as this will usually be agreed as part of the performance appraisal process and progress will be reviewed regularly.
Types of Individual Bonuses
- Productivity Bonus - Traditionally this is been used in the manufacturing industry and is otherwise known as piecework, where the number of items produced over a certain period of time determines the bonus paid. However, recently more organisations have taken this approach, for example, the number of calls taken by a call centre worker during an hours period
- Quality Bonus - Similar to productivity, a quality bonus can be assessed on the number of defects on products during a period of time. As with productivity, many industries are now taking this approach, for example, reducing the number of customer complaints within a supermarket
- Targets - A well used tactic within internal and external sales environments. Target bonuses are paid if an individual hits a sales figure within a certain period, usually monthly, quarterly or annually. The figure can be a percentage increase on the previous period or a pre-defined target based on expectations
Team Bonus Schemes
Team based bonus schemes have proven to be very popular as they help to increase productivity and rapport within a department. Advantages of this are usually when a team does well the company also benefits. In addition, a team reward system helps to create a good competitive environment within each department. Team bonuses can be used in a variety of industries such as sales, manufacturing, clerical, and retail.
Company Bonus Schemes
A company bonus scheme may be set up within an organisation, meaning everyone employee is rewarded based on the overall performance of the company. A good example of this is the John Lewis Partnership scheme, where every year every john lewis partner (staff member) is rewarded with a percentage of their annual salary.
Bonus Scheme Options
There are of options available for an organisation wishing to implement a bonus scheme, some of which can be very cost effective:
- Cash Bonus - A straight cash bonus is the method of some organisations, the advantage being it is easy to administer internally, the downside is it isn't as cost effective as other options and employees will suffer as they have to pay tax on their extra income
- Gift Vouchers - A typical gift voucher scheme is highly effective becuase of their flexibility, gift vouchers can be used to incentivise almost everyone. The benefits for an organisation are the significant cost saving when buying gift vouchers in bulk
- Share Schemes - Some companies will opt for a shares based bonus scheme, again this is easy for an organisation to administer through their internal process and employees have the potential of their shares growing over time. Disadvantages being shares can also dip in price
- Corporate Gifts - Corporate gifts are traditionally used for long service awards, however nowadays the type of gifts on offer go way beyond carriage clocks and golden watches
- Online Points Banking - Online points systems are a great way to allocate bonuses at the touch of a button. Employees also have the option to nominate someone for recognition or a job well done
- Flexible Benefits - Many flexible employee benefit schemes give employees the option to choose their bonus from items such as vouchers, restaurants, cinema tickets, travel and electrical goods
If you would like to know more about bonus schemes and how Love2reward can help with your bonus structure, please talk to us today.
Find out more on bonuses, or more specifically: