Bonus/Commission Plan/Structure

searcher profile

September 23, 2022

by a searcher from Cornell University in Santa Barbara, CA, USA

Hey everyone,

Looking for some input on how best to structure a commission plan for employee bonuses. We have some pretty straightforward KPIs that the team is evaluated on as a baseline, but interested to hear what has worked/not worked not only in the structure (percentages, fixed tired amounts, pools etc.) but also in the implementation and execution of a commission plan.

Thanks in advance!

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Reply by an intermediary
from City University of New York, Bernard M. Baruch College in San Francisco Bay Area, CA, USA
Leo, I have set up many commission/bonus plans. I find the best bonus is quarterly. When you set it up for a year and employee feels its unattainable they give up. It's better to keep it for a short period of time. Be careful, the person doesn't sandbag(hold off something to next quarter because they wont achieve bonus for this quarter). I usually do an MBO(management by objectives. Set up max of 5 criteria to hit bonus and make sure they are not subjective. It only leads to ill will
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Reply by a searcher
from Dominican University in Tampa, FL, USA
Hi Leo, a resource that may help with this is the Scaling Up: Compensation book. There is a chapter all about incentives.
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