5 Mistakes in the Development and Implementation of a Bonus System
Posted: Sun Jan 19, 2025 5:40 am
Let's look at five common mistakes in developing and implementing a bonus system:
Independence of remuneration from work results
Giving the same bonuses to all employees, regardless of their productivity, can reduce motivation, generate discontent in the team and staff turnover. To solve this problem, a scheme should be introduced to link the amount of remuneration to specific performance indicators (KPI) or other objective performance results.
The bonus system is used for manipulation
Using payments and fines instagram data package to influence employees can create a negative psychological environment. To solve this problem, clearly define the rules and violations for which you can deprive the bonus. Use a motivation system, not punishment.
Low premium level
Small rewards may not motivate employees and may cause them to become dissatisfied. If large financial bonuses cannot be provided, use non-financial motivation methods such as thank you letters and recognition.
Time lag between results and payments
A long interval between completing a task and receiving a bonus can reduce the quality of incentives for employees. To avoid this, plan for more frequent payments so that specialists see a connection between their efforts and their assessment.
Unachievable targets
Setting unrealistic goals and incentives can demotivate employees. To solve this problem, consider physical capabilities and job specifics when developing performance indicators so that the indicators are achievable.
So, the development and implementation of a bonus scheme should be carefully thought out and aimed at motivating employees, not manipulating or demotivating them. It is necessary to take into account specific performance indicators, the fairness and transparency of the system, as well as the financial capacity of the company to provide payments.
Download a useful document on the topic:
Checklist: How to Achieve Your Goals in Negotiations with Clients
Bonuses for financial problems in the company
In some cases, a conscientious and responsible employer may temporarily face serious financial difficulties or expect them to appear in the future. The question arises: if a company has a bonus or other incentive system, should employees receive the corresponding payments if they fulfill all the conditions, regardless of the financial condition of the organization?
Bonuses for financial problems in the company
Courts take into account the employer's position if internal documents stipulate that the payment, its frequency and the size of the bonus depend not only on the employee's key performance indicators, but also on the overall performance of the organization (see the Appellate Ruling of December 22, 2015 in case No. 33-47178/2015). This means that, for example, it is possible to establish a correction factor to the bonus formula that cancels the payment of the bonus when a certain level of the company's debt to its clients is reached.
The courts also recognized that such payment is not mandatory if internal regulations do not contain an explicit indication of its mandatory nature (see the Ruling of the Civil Division of the Supreme Court of the Russian Federation dated November 27, 2017 No. 69-KG17-22). But for the sake of clarity, it is recommended to clearly indicate that the accrual of the bonus is not the employer's obligation. Otherwise, he must pay these amounts in accordance with the established rules.
Frequently asked q
Independence of remuneration from work results
Giving the same bonuses to all employees, regardless of their productivity, can reduce motivation, generate discontent in the team and staff turnover. To solve this problem, a scheme should be introduced to link the amount of remuneration to specific performance indicators (KPI) or other objective performance results.
The bonus system is used for manipulation
Using payments and fines instagram data package to influence employees can create a negative psychological environment. To solve this problem, clearly define the rules and violations for which you can deprive the bonus. Use a motivation system, not punishment.
Low premium level
Small rewards may not motivate employees and may cause them to become dissatisfied. If large financial bonuses cannot be provided, use non-financial motivation methods such as thank you letters and recognition.
Time lag between results and payments
A long interval between completing a task and receiving a bonus can reduce the quality of incentives for employees. To avoid this, plan for more frequent payments so that specialists see a connection between their efforts and their assessment.
Unachievable targets
Setting unrealistic goals and incentives can demotivate employees. To solve this problem, consider physical capabilities and job specifics when developing performance indicators so that the indicators are achievable.
So, the development and implementation of a bonus scheme should be carefully thought out and aimed at motivating employees, not manipulating or demotivating them. It is necessary to take into account specific performance indicators, the fairness and transparency of the system, as well as the financial capacity of the company to provide payments.
Download a useful document on the topic:
Checklist: How to Achieve Your Goals in Negotiations with Clients
Bonuses for financial problems in the company
In some cases, a conscientious and responsible employer may temporarily face serious financial difficulties or expect them to appear in the future. The question arises: if a company has a bonus or other incentive system, should employees receive the corresponding payments if they fulfill all the conditions, regardless of the financial condition of the organization?
Bonuses for financial problems in the company
Courts take into account the employer's position if internal documents stipulate that the payment, its frequency and the size of the bonus depend not only on the employee's key performance indicators, but also on the overall performance of the organization (see the Appellate Ruling of December 22, 2015 in case No. 33-47178/2015). This means that, for example, it is possible to establish a correction factor to the bonus formula that cancels the payment of the bonus when a certain level of the company's debt to its clients is reached.
The courts also recognized that such payment is not mandatory if internal regulations do not contain an explicit indication of its mandatory nature (see the Ruling of the Civil Division of the Supreme Court of the Russian Federation dated November 27, 2017 No. 69-KG17-22). But for the sake of clarity, it is recommended to clearly indicate that the accrual of the bonus is not the employer's obligation. Otherwise, he must pay these amounts in accordance with the established rules.
Frequently asked q