Partners on the Payroll by Bill Fotsch

Author:Bill Fotsch
Language: eng
Format: epub
Publisher: Indigo River Publishing
Published: 2021-12-14T22:27:56+00:00

Bonus plans for large companies

It’s pretty easy to create a bonus for a small company. Big ones often find that corporate policies regarding compensation are an obstacle. But big companies are mostly just collections of small businesses, each with its own local economics. A large company that figures out how to pay bonuses based on a combination of unit and corporate performance—in a way that makes the whole thing objective, transparent, generous, and self-funding—will find that people soon come to understand the connection between performance and rewards. It will also find that they’re motivated to do better, just as they are at One Week Bath.

A credit union I worked with, for example, already had a companywide annual profit-sharing program. But the company had many branches and decided to try the partnership approach in three of them. The question then came up: Do the test branches develop their own incentive plan or do they stay in the companywide profit-sharing plan? There was quite a discussion. Eventually, the company’s leaders agreed to a cumulative quarterly incentive plan on incremental performance, starting at 5 percent above budget. The incentive plan for each member of the branch was determined 50 percent by local performance and 50 percent by the performance of all three test branches. The level of cooperation and joint accountability soared, as did the branches’ performance.

One final word: it’s often said that nobody works for money alone and that nobody is solely motivated by the prospect of more money. There’s a lot of truth in that. If you’re doing a job day in and day out, you may be motivated more by the demands of the work itself—the development of mastery, as bestselling author Daniel Pink puts it—and the people you’re working with than by the prospect of financial gain. But people always like to win, and they like to feel that their efforts to help the company win are appreciated and rewarded. Nothing says “thank you” like several weeks’ worth of extra pay. And nothing encourages people to think like partners as much as knowing they will be paid like partners—and knowing how they themselves contribute to larger and larger bonuses.

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