Create a bonus plan that boosts business and workers’ morale

Another company that Mazzella worked with, a Midwestern clothing manufacturer, told employees it would add 20 per cent to the bonus pool if the firm maintained sales for 2009.

“Bonuses need to provide a bit of reach for employees but not be impossible to achieve,” says Stovall.

New ideas

A company can offer a fixed percentage or dollar amount for developing a process or strategic improvement that is expected to improve profits in the future.

“In this case, the company assumes the risk, but it also limits its potential cost for developing the new product or service,” says Gavejian.

Once you decide on what type of programme to implement, there are a couple musts to keep in mind: Outline plan characteristics. Be clear about who’s eligible—just managers, or will support staff and subcontractors be included? “Some organisations push bonuses down to the administrative staff to give the feeling that a true team effort will help everyone earn more,” says Gavejian.

Clearly communicate programme guidelines

Perhaps the most common pitfall when creating a bonus program is not clearly communicating it to employees.

It’s essential that there be a written, clearly documented program me “that addresses the structure of the plan, fairness, measurability and attainable targets,” says Stovall. In sum, the plan should “be transparent (and describe) what you’re doing and why,” says Mazzella.

Toddi is a contributing writer covering career management issues for The Wall Street Journal.