Incentives, Bonus and Commission
It is often used as a tool to retain top talent, encourage employees to work towards specific goals, and align their interests with those of the company. Incentive schemes help you answer the following business questions:
- How do you reward people who go the extra mile or who contribute extra value?
- How do you encourage specific correct behaviours such as growth focus of customer satisfaction?
- How do you take advantage of those who are money drive to get a little more?
- How do you entice the very best to the company?
- Ensure that people stick around?
- Ensure people get what they are worth?
The key element for all incentive packages is to encourage the right behaviour and eliminate the wrong behaviour.
An incentive payment should be regarded as distinct from commission payment. These are typically targeted at two different employee types Commission is a type of payment given to an employee or salesperson for each sale they make. It is usually a percentage of the sale or service cost whereas Incentive payments are rewards offered to employees or salespeople for achieving certain performance goals They are usually targeted at consultancy delivery, support or management employees
There are a number of different types of incentive schemes that can be rolled out in consultancies. The exact terms of all of these extra payment type will vary from one business to another, so it is important for employers and employees alike to understand what criteria are being used when considering such rewards.
These include the following
- Discretionary bonus. bonus payments are typically discretionary and are not guaranteed. They are often awarded at the discretion of management and are subject to company policy and budget constraints.
- KPI related bonuses are usually tied to specific performance metrics such as project completion, meeting deadlines, exceeding revenue targets, or demonstrating high levels of customer satisfaction. By linking bonuses to these performance indicators, consultancies aim to incentivize employees to deliver high-quality work and achieve business objectives
- Joining bonus is an incentive offered to new employees by many employers as a way of encouraging them to join the company. It may come in the form of a one-time payment, additional vacation time or other benefits that are not typically available to existing staff members. Joining bonuses can also be used as a recruitment tool, helping attract top talent from other organizations. They can also help offset any costs associated with relocating for a new job and provide financial stability during the transition period between jobs.
- Employee loyalty bonuses are rewards given to employees who have been with a company for an extended period of time. Loyalty bonuses serve to reward employees for their dedication and hard work over the years, while also encouraging them to stay with the same employer longer. Companies can gain many advantages from offering these incentives; increased morale among existing staff members and better retention rates
- Profit share is a system of remuneration for employees, where part or all of the profits generated by an organization are shared among its employees. Profit sharing can be implemented in different ways, such as distributing profits annually, dividing them into shares which can be held until retirement, or using bonuses based on individual performance.
- Group and Individual incentives. Additional payments to employees can be tied to both group and individual criteria, depending on the business. Group performance criteria could include overall sales or profits for the company, while individual performance could be based on specific goals met by each employee. Such additional payments may also depend on a combination of both group and individual successes in order to reward team efforts as well as personal achievements.