A Bloomberg Business article recently quoted from a Towers Watson survey of 170 companies stating the following, “three in ten employers still plan to give bonuses to workers who failed to meet performance expectations(Woolley).” I do not know all of the reasons for handing out bonus dollars to under-performers, but I do know giving bonuses when none is deserved leads a company into mediocrity. Companies that want to excel, outperform their competitors, and build a high value organization will handsomely reward achievers while giving reduced or no rewards to those who failed to meet expectations. I know this is true for two main reasons. First of all, I have seen it first hand in my thirty four years of experience working with both large , medium, and small businesses. The companies that grew efficiently rewarded high achievement. They did not reward poor performance. Second, people are motivated by money. It is human nature. I understand that money is not everything nor should it be, but never doubt that money is a primary motivator and people will work very hard to achieve in order to obtain a bonus goal. Sandra McLellan, Tower’s Watson’s director of rewards consulting, is quoted in the Bloomberg article as follows, “over time, some companies have simply ‘lost clarity about the purpose of their [bonus] programs(Woolley)’.” Below are three simple rules for setting up an effective bonus program.
- Companies must have a strategic plan that sets specific targets that, if achieved, defines success for that organization.
- Every employee must understand their role in helping the company achieve its strategic targets.
- An individual bonus program is developed for each employee that rewards them for achieving individual targets that move the company toward its goals.
Reward high achievers ,not under-performers, and move your company forward.
*Woolley, Suzanne, Bloomberg Business, (September 21, 2015), A Third of Employers Give Bonuses to the Poorest Performers