|
|
Like this article? PLEASE +1 it! |  |
|
6 Mistakes to Avoid When Setting Up A Bonus System
| Guest post by: Jenny Stilwell |
Article Overview: Setting up a Bonus System does not need to be difficult, it doesn’t need to add unsupportable expense into your business, but it does need to be equitable and it does need to be easy to understand and implement.
 |
Free Download - Create Your Signature IP for Easier & More Successful Marketing By Jenny Stilwell |
6 Mistakes to Avoid When Setting Up A Bonus System
Setting up a Bonus System does not need to be difficult, it doesn't need to add unsupportable expense into your business, but it does need to be equitable and it does need to be easy to understand and implement.
When you decide to set one up for your business, keep these typical mistakes in mind, so you avoid making them!
Mistake #1: Equity is not a form of bonus
Many business owners often use ‘equity' and ‘bonus' as interchangeable terms. They want to reward their people for doing a good job, but aren't sure exactly what they want to do for them.
Equity is a share of the company, and brings with it shareholder liabilities. Most people don't want equity in their employer's business, but they do want a bonus for good performance. Bonus payments are paid out of profit and based on degree of performance.
Mistake # 2: Most bonus systems are not based on forecasts
If you don't know what your sales, margin and profit expectations are, how can you determine what amount you will allocate towards bonus payments?
Mistake # 3: Most bonus systems don't include the company's performance as well as individual performance
If the company doesn't perform according to plan (refer Mistake # 2 about forecasts...) then there won't be much excess for a bonus pool. If employees are offered bonus rewards that are contingent only upon their own performance and not the company's, there may not necessarily be excess funds in the company at the end of the year to pay individual bonuses.
Mistake # 4: Bonus systems are put in place without a process to assess individual performance
So many business owners make bonus payments on an ad hoc arbitrary basis, often to individuals who don't necessarily deserve the bonus. Without having a system in place to assess everyone's performance in a consistent and fair way, there is no way to accurately determine appropriate bonus payments.
Mistake # 5: Because of Mistakes 1-4, most bonus systems are not clearly understood by everyone in the company.
If people are unaware of potential bonus rewards, and don't take the system seriously, there is no point in having it.
Mistake # 6: Most business owners fail to implement a structured bonus system
If there's no structure and no guidelines, it won't work because it will all be too hard. In order to act as an incentive, a bonus system must be well communicated, well thought through and well managed.
Instant Article Writing Template: The Top Mistakes Article Writing Template Explained in Detail
Three Common Marketing Mistakes
Major Crisis don't just happen!
Lesson #1: “If you get knocked down, get back up again”
3 mistakes in selecting a right Web Development Company
Using Mistakes Successfully
Top 7 Mistakes that Prevent People from Achieving
Mistakes to Avoid When Setting Goals for Your Internet Based Business
Why Rewards Cause Problems #2: Rewards Can Punish
Over Achievers on the Sales Force - We Have it All Wrong
Failure and Risk
Steps to Reach Your Goal!
Demand More Money by Using your Ads to Ask for Action
Make No Mistake, We Should Make More
Internet Marketing Specialist Can Help Your Business Grow
Science Daily Week: Which is more effective: bonuses or raises?
18 STRATEGIES TO AVOID CHANGE
Automated Money Machine Review By Chery Schmidt
There are do’s and don’ts in starting your opt-in mailing list.
How should I reward employee performance?
Article Tags: bonus system, bonus systems
|
About the Author: Jenny Stilwell RSS for Jenny's articles - Visit Jenny's website Want to use this article on your website or your own ezine? No problem! But here's what you MUST include: Jenny Stilwell is the founder of BOSSMENTOR®, a mentoring consultancy providing advice on strategy and business growth for professional, lifestyle-oriented business owners who want to grow the value of their businesses and ultimately spend less time working in them. To get your complimentary copy of Jenny's special report ‘3 Ways to Dramatically Increase Your Income & Business Growth' and receive her fortnightly information on marketing and business strategies that will help you create a better business, visit http://www.bossgroup.com.au Click here to visit Jenny's website   3 Ways to Make Your Business More Secure The Role of CEO as Marketer Smart Tips for Working the Room How to Measure Your Marketing Results 6 Steps to Finding Hidden Value in Your Client Base |
Related Forum Posts
Re: 365 Foolish Mistakes Smart Managers Make
- [quote="litekepr":2v18lglp]This morning's Google Alert held a pleasant surprise.
WORTH MENTIONING
A List of New Books Compiled by
The Management and Government Information Center (MAGIC)
Chinn Park Regional Library
703-792-4880Summer 2007
Indicates titles relating to the FISH Philosophy
365 Foolish Mistakes Smart Managers Make Every Day: How and Why to Avoid Them by Shri L. Henkel, 2006
interesting. Is anyone else here familiar with the FISH philosphy?
i[/quote:2v18lglp]
Congrats on the mention of your book! Hopefully it will drive up sales!
For myself, I don't really care for their acronym... MAGIC. Gives people the subtle impression that good things happen at the snap of a finger instead of lots of hard work!
Book: The System
- [quote:3e8ncw28]What was the name of that book -- the high finance murder mystery?[/quote:3e8ncw28]
Sorry for the delay in answering this question.
The book is:
The System: A Story of Intrigue and Market Domination
Terry Waghorn
Perseus Piblishing
2002
Jacket description:
In a world where competitive advantage is temporary at best - and illusory at worst - there is nothing more important to the business enterprise than creating a robust strategy and executing it with Steve. In The System, Terry WAghorn illustrates this universal theme through an action-packed adventure.
Re: How do you monitor what people say about you in the web?
- Setting up Google alerts for your keywords can give updates about your site. Also the publicity you create in the social media sites will do help too
Re: HOW TO: Upload Your Picture in 4 Easy Steps
- With Ububtu Operating System how can i apply this procedure?? I hope you would give me clarity ... Thanks in advance...
Re: What is Your Favorite Thing About Owning A Business?
- 1. Not feeling like I have to get approval for anything.
2. Not feeling like I have to please anyone.
3. Not having to ask permission before I do something.
4. Setting my own hours.
5. Sounding really cool when I tell people I have my own business.
Share this article with your friends. Fund someone's dream.
Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
by: 
How To Use Carbon Copy Pro As A Strategic Tool For Your Business
Best Automated Forex Trading Strategy
Build Your List with Joint Venture Giveaway Events
May 2012 Top 100 Social Media Experts to Follow on Twitter
What to measure to be phenomenally successful in business
Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!
What To Do With a Troublemaker?
Angel Investors Where Are You?
Tips for the Novice Traveler
Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.