Most employers act as if they’re paying people to show up to work. In reality, you’re only attempting to purchase certain behaviors and results connected to those behaviors, including cooperative and even enthusiastic compliance with your program. So all compensation should be tied as clearly and directly as possible to those objectives.
To effectively develop bonus or compensation opportunities in your company, these 3 things should be considered:
1) You have to think about what “extra effort” behavior you want to try and buy, what it’s worth to you, and what you’re willing to pay for it.
2) You have to figure out what will be most motivating to the person or people you’re trying to buy extra effort behavior from with your bonuses.
3) You have to decide whether to institutionalize the bonus plan or set it up as temporary and short term, then have it go away to be replaced with a different one.