The subject of staff bonuses can cause huge problems if not handled properly.
Over the years various commentators have suggested a variety of scientific formulas that are intended to reward performance over and above normal expectations in a way that is fair to all.
It can be a challenge, either if one individual doesn’t agree with the basis of calculation or if the whole team fail to reach an agreed target.
This week’s link is to a simple bonus calculator that allows you to distribute a given % of your monthly profits to all salaried team members in proportions that equate to their individual slice of overall payroll.
If profits are £10,000 for the month and you decide to pay a 5% bonus – then that is a £500 bonus pool.
If an employees salary equates to 10% of overall payroll costs, then they get 10% of the profit pool = £50 for the month.
A quick look at the spreadsheet and you will soon get the idea.
The sole basis of calculation here is basic salary as a % of total payroll costs – it is assumed that seniority, experience, qualification and attitude are all reflected in that basic salary figure.
This isn’t THE bonus system, it’s A bonus system – one that everyone can understand and has been used by some clients over the years.
7c Bonus Calculator