The key is to do some math to make sure that the amount you allocate in each action, adds to your total bonus amount and motivates the potential payment for the people involved. One of the most common questions I`m asked by executives is: How can I create an incentive or bonus plan? In the future, it also planned to use the 10% threshold to determine its pool of interest, regardless of the profit it earned. In other words, if the company generates only $1 million in profits, the pool would be $100,000. If the profit were $3 million, the pool would increase to $300,000. Now, probably to generate higher levels of profit, it would be more people in business, so the bonuses will not increase forever. The crucial point here is that since it is an incentive plan (and ultimately bonuses are also incentive plans), your business needs to generate profits. This is where the bonus money will come from. If you are not profitable and you run into the red numbers, you should reconsider the premise of creating such a plan. 1. You have to decide the size of the money pool you are going to pay for. In our example, the company has 20 employees and 25 actions depending on the role.

In this case, a share is worth 8,000 $US (200,000 $US/25 $US – $8,000). For example, a front-line person could receive $8,000, a leader $16,000 and a senior executive $24,000. This probably means that people older will receive a larger percentage of their salary as bonuses. Once you have solved the problem of creating your bonus pool, you must now decide how to distribute the money to your employees. 5.1 Other bonus plans: The bonus plan replaces all previous bonus plans and cannot be changed unless it has been approved in writing by the CEO and the Chairman of the Compensation Committee. 5.9 Cessation of the employment relationship: if the active employment of a worker ends during the year due to retirement, total and disabling disability or death, the member receives a proportional bonus, provided that all other criteria are met. Another way to pay the bonus would be to compensate people based on their role in the business. You can do this by splitting the pool into shares, with each action worth a certain percentage of the pool.

Then you pay the bonus based on the number of shares an employee receives – usually based on their position in the company. They can, for example, each give action to front-line employees, while executives receive two actions and executives receive three. Whichever distribution method you choose, you should also, as an owner or CEO, allow you to make other adjustments based on the performance of individual employees. If an employee who had two bonus pool shares is well below average, don`t hesitate to reduce his actions to send them a clear message. Remember, the goal of the incentive or bonus plan is to reward employees for their contributions to the overall success of the business – this is not a claim program. But it`s a clear way for the team to understand what the potential bonus is when they do a good job and it`s much better than just a management judgment plan. This is a simple and stylish way to create your bonus pool, which is also scale or reduce depending on the good work of the company and it steers the team with profit goals. Do we really need another person, or can we do it with the current team, will it be an interesting conversation if everyone makes less money, when people are hired? The amount to be paid to an employee of the company depends on a percentage of that employee`s basic annual salary.