Smart in 60 seconds! Today’s bonus systems
The latest instalment in our series “The agency bloggers”. Here, we regularly explain key terms of agency controlling in a brief, concise and hands-on manner. Today, we’ll talk about bonus systems.
Many companies and agencies use bonus systems to increase employee motivation and loyalty to achieve better overall results. A bonus, in a general sense, is paid by the employer in addition to the employee's base salary. The bonus can be paid out once or on a regular basis. Revenue sharing is a classic example.
In most cases, hard factors are considered when creating the bonus system. These hard factors are classic KPIs such as “per capita revenues” or “per capita return”. These KPIs can be easily calculated using agency software and an overview can be kept. Soft factors can, however, also be applied in the process since reliability and compliance with deadlines are also essential for the success of a project. Clear quantification of these soft skills is important for calculating the bonus. For example, how many projects are completed on time.
In any case, the make-up of the bonus system should be decided on a case-by-case basis. Defining specific, fixed targets with the employee and keeping the bonus system transparent and measurable is particularly crucial.