Christmas / Year-end Bonus

media2it · PayPerShop Newbie Joined: 18 Dec 2007 Posts: 3

I am looking to give out year end bonus to my employees, however, I am not sure what is the best way to calculate the amount to be given out to individual employees - ranging from software developers to director level. Is there any standard formula that is used and universally acceptable?

Ian Whyteside · Posted: Wed Dec 19, 2007 11:11 am Post subject: Christmas/Year end Bonus

What an interesting question and I suspect a lot of people will have read this and thought, whats he asking this for, just pay out what you think is relevant!

And actually that was my gut reaction, but on further thought i realise it is not as simple as that, is it?

My feeling reloves around the question, is the bonus part of the overall remuneration or not and i think it is. Being the case, as i see it, does not the calculation of any bonus have to satisfy all legal and moral equality requirements?

One of the biggest problems managers face is calculating a bonus which genuinely boosts staff feelings and how many managers have dished out bonuses, feeling very pleased with themselves only to find out later that once staff have started to compare their award half of them end up demotivated and some insulted, always at the complete surprise of the manager/owner.

I think this is one of the hardest things to do, make payments like this and to match them to the contribution individuals have made without acheiving the opposite of what was intended.

Some employers give out bonuses and then instruct staff that they are not permitted to discuss the amounts with each other, but thats naive in my view, they will discuss and they will compare and i think managers ought to just accept this.

In answer to your question i don't think there is any set formula and how could their be, every employers approach to this is going to be, and has to be different. Whether you like it or not you will have to think about it carefully and try to match the amount to the contribution the individual has made to the company.

It would be wrong to seek to reward sales staff for example out of proportion to the support staff, their role in ensuring the efforts of the front line are not undermined should not be underestimated, however we cannot ignore the huge contribution front line staff make.

What i would advise you to avoid is tailoring the reward to the time a person has spent in the organisation, that might offend age discrimination laws and in any case just because someone has been with you for x years does not mean they are always delivering what you need.

Finally, once you have made your decisions stick to them and do not get involved in continual discussion about how fair you were, i would accept the fact that some people will be deliriously happy with your payment, some will be quite offhand and some will be offended or even insulted, you cannot always predict human behaviour and we just need to accept it. If you think about what you are going to do and feel, in all the circumstances you have been as fair as you can be then you may have to ignore any negative views and move on.

That, for what they are worth, are my views on the subject but i have to confess i have no experience of the matter, all i know, from a public sector background, is how not to do it because time and time again public sector managers find that they want to reward good performing staff but are prevented from doing so by a system which tries so hard to be fair that it rewards poor performance and ignores the hard working ones without even thinking about it.

Ian Whyteside