April 16, 2018

Write A Bonus Plan That Actually Leads To Growing The Business

Assume you had a $50,000,000 company like Gliebers Dresses. You write two bonus objectives that look something like this:




Now assume that your team EXCEEDS each objective. Now you have to pay people.

You probably run forecasting simulations that tell you what your business looks like at the end of the year if you grow new customers and increase annual demand, right? Right? Your Finance Team added up the sum of all cash bonuses and realized that the total cash to be paid out was $1,300,000.

In the case of Gliebers Dresses, assume that we have an $8,000,000 increase in demand and the increase leads to a $2,500,000 increase in profit. In essence, the profit is being shared ... half goes to the employees that caused the profit increase, half goes to the brand.

If you write your bonuses in a smart manner, you essentially create a profit sharing plan ... a REAL profit sharing plan.

How is that a bad thing?

Discuss.

Show of hands ... how many of you work for a retail brand or e-commerce brand or catalog brand that pays healthy bonuses?

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