how to structure a bonus system

Why not base a scheme on a combination of sales and profit targets for the products he is responsible for? You may choose to reward him with say up to an additional 10% of his salary if the target is reached, with a sliding scale for under and over achievement.

Do you know if that is a plan that other companies use? I don't want to necessarely re-invent the wheel but will if necessary. :-)

Thanks.

Robert, 1st ask your self what behavior do you want to reward. A good comp system will have this in mind as milestones are hit or acomplished. Money or other comp flows upon "hittin' the numbers".

I would say you also need to understand your employee and see what comp "fires his rockets" ... so to say...

The company gets more business as in makes more money.

The problem is how exactly to structure the plan?

Sales have been up because of his efforts. Should he just get a percentage or what?

On Thu, 18 Aug 2005 14:32:55 -0700, in alt.accounting "Robert Anderson" wrote in :

Personally, I think that folks who do more than they are getting paid should get their bonuses in shares of the company. That rewards them, and helps keep them committed to the future.

Marketing/sales folks often like quick bonuses - monthly or quarterly.

It would be great to be able to give people a stake in the company but we are not public so no real shares.

What can I do to give people a stake in the company so they feel some ownership and they can make more money the more the company succeeds?

It would be great to be able to do this!

Sure, sales people make commisions. It is very easy to figure out how to pay that.

Marketing is less clear. That is the challenge I face. How to reward a talented marketing manager whose accomplishments are there but less clear than, say, an individual salesperson.

In marketing, it seems very common for there to be a commission system where a portion of peoples' compensation to come as some sort of percentage of sales.

In lean years, the marketing people don't do well. But the fat years are quite good to them...

On Thu, 18 Aug 2005 15:14:03 -0700, in alt.accounting "Robert Anderson" wrote in :

You don't need a publicly traded corporation to allow others to be partial owners of the business. One thing you can do is guarantee them X% of the profit or X% of the profit plus Y% of the profit above $Z.00.

Commission overrides also work.

Do you know exactly how these programs are structured? I need some details in order to implement something like and don't want to re-invent the wheel.

That is, do you know what percentage they are and so on?

Thanks.

On Thu, 18 Aug 2005 20:19:00 -0700, in alt.accounting "Robert Anderson" wrote in :

It depends hugely on the industry and gross margins of the products you sell.