Bonuses and KPIs

The bonuses are the performance driven compensation component, mainly driven by the net profit of the company. The bonuses are the reward for achieving the individual and the company goals. The mixture is always decided by the top management of the organization.

The top management has to analyze the business strategy and it has to make a decision about the weights of different KPIs in bonuses. It is really a strategic decision as it says to managers and employees, what behavior and results will be valued by the top management.

The top management can decide about the support of the cross-selling activities and the individual part of the bonus can be decreased or the different sales channel employees can be mixed that they have the real financial reason to cooperate with the employees from different units.

The top management has to specify the criteria, when the bonus is not paid. The company has to meet the goals to pay the bonuses or they can be decreased as the goal is not met. When the organization is not making any profit for the shareholders, the bonuses should not be paid at all as the bonuses are paid from the additional value added for the shareholders. When no value added is generated, the bonuses should not be released.