The strategy would vary on the basis of goals the corporate wishes to achieve:
You need to answer questions like:
1. Is it a retention strategy?
2. what should be the appropriate slabs of bonus for differential performances.
3. Is it targeted at the best performing or the average performances? means are you trying to retain the average employee or the best performing ones? Is cash bonus the only incentive for retention etc?
There can be many such questions.
Regardless there are few basics of any bonus strategy:
1. Stick to cash in hand - ie give the bonus in cash form only
2. landmarks should be clearly defined
3. payment should be in time. Don't delay
4. Avoid punishment: as much as possible avoid inbuilt penalties for non-achievement.
CAclubindia
