Bonus Plans

Written by Patricia Skinner
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Some companies and organizations find that the best way of motivating employees is by offering bonus plans. This is especially true of work that involves selling or production of some kind. Giving employees a goal to reach can be a very effective way of raising production levels. This has the added effect of creating an atmosphere of competition between coworkers, which can further raise productivity.

The problem is that there are conditions under which bonus plans don't work. In fact sometimes they fail so miserably that they can actually cause trouble instead of smoothing the path of production. Take the example of two employees. One of them has an easy task, and the other has a very difficult task. The difference could be purely on a level of how easy a customer is to work with, and not be anything to do with skill levels or personal characteristics.

Effectiveness of Bonus Plans

One employee is not going to make the bonus under these circumstances, and it won't be his fault. He may end up feeling very bitter when his coworker gets the coveted bonus, particularly if the same scenario plays itself out several times. So if you're thinking of having your bonus plans take care of all your business problems, you could be in for a rude awakening. This program has to develop the right measures and pay out the right amounts.

Even with the best bonus plans in effect, employers will still need to pay close attention to management issues. This will likely involve close follow up of employee performance, and periodical skill reviews. It is a mistake to think that a bonus plan is going to foster the kind of loyalty you dream of in employees. This is very unlikely to happen except in cases where the employee is of exceptional caliber anyway.

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