Looking for a Bonus plan?

The most common set-up is that your employees have to meet predefined targets, key performance indicators (KPIs), such as billed hours or realized turnover. If the employees actually meet those pre defined targets, they get a bonus reward. Often these targets are adopted in an employment contract that is tailored specifically to the employees' situation, but on other occasions their bonus is recorded in an addendum to the employment contract.

Before creating a bonus structure in the company, it is wise to think about the behavior you, as an employer, want to stimulate and what type of culture you want to create within the organization. Creating high financial incentives could lead to unnecessary risks being taken by the employees and in some cases might even instigate employees to commit fraud. Also incentives could create a “back stabbing culture” or an unsafe environment for people to work in. Therefore setting KPIs in the organization is a delicate process.

To give your employees a long-term incentive, it is wise to release the bonus only after a certain number of years. You can also choose to pay out part of the bonus annually, and another part after a certain number of years.

It is common for a bonus scheme to state that in order to be eligible to receive a bonus award, an employee must still be actively employed by the employer on the bonus payment date. This will incentivize the employee to stay with the organization.