Designing a Transparent and Performance-Driven Bonus Plan
Problem Statement
A real estate logistics start-up was struggling with their liaising and investment departments with the below-
- retain its top talent
- motivate employees for higher performance
The existing plan was unclear, lacked transparency, and did not reward high-performing employees adequately, leading to dissatisfaction among employees and higher turnover rates.
Approach
- Current Bonus Plan Assessment: Began by thoroughly examining the existing bonus plan, identify its shortcomings and areas that need improvement.
- Feedback: Conducted interviews, and feedback sessions with employees, their managers and BU heads to gather their perspectives on the current bonus plan. Understand their concerns, expectations, and suggestions for improvement.
- Market Research: Researched bonus plans in the industry, identifying successful models and best practices for performance-based incentives.
Solution
- Developed a bonus plan centred around key performance indicators (KPIs) directly linked to the company’s goals.
- Designed a bonus plan with clear and measurable criteria for performance evaluation. Employees should know exactly what is expected of them to qualify for a bonus.
- Embedded transparency in bonus calculations and pay-out structures. Provided employees with a clear breakdown of how bonuses would be determined.
- Implemented a tiered bonus structure that rewards higher performance with higher pay-outs. This approach motivates employees to strive for excellence.
Success: Our project’s success shines through in how we met our objectives:
01
We established clear and transparent criteria and pay-out calculation methodology.
02
The newly designed bonus plan was simple and easy to understand.
03
Leadership buy-in due to its direct linkage with business objectives.
04
Conducted 5+ workshops to educate and socialize the new plan to bring in transparency.
05
After the implementation and launch, employees felt enthusiastic and motivated to achieve their targets because of higher pay-outs for higher performance.