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David Norman & Associates

*Incentive and Bonus Plans

Questions to Ask

  1. Do you and/or your employees feel that there is a compensation system which clearly rewards and recognizes top performers?
  2. Are personnel costs rising faster than is desirable or affordable?
  3. Is your organization losing key employees to other organizations?

Description of Service

A formal incentive compensation plan is structured to provide compensation based on attainment of certain goals and includes sales compensation, company-wide incentives, gainsharing, value-added, and other plans.

Benefits

  • Improved individual and group performance
  • Enhanced ability to reward top performers
  • Decreased pressure to continually increase base compensation
  • More trust among management and employees, based on a "win-win" situation
  • More effective business planning process due to the link with the reward system

Examples

A metal forming job shop desired to have a plant-wide incentive compensation to reward for improvements in productivity. Results -- Productivity increased over the short-term by 13 - 17%, and employees were paid incentive compensation biweekly. Over the longer-term, the company became recognized as "a place to be employed" because of its reward systems.

A pharmaceutical manufacturer desired to have a bonus plan designed to tie the attainment of strategic goals to compensation. Results -- Management activity was more focused on the specific tasks associated with the goals and objectives of the long-range plan and management bonuses were based on personal and group achievement.

A wood molding manufacturer wanted an incentive plan for plant and supervisory personnel. A gainsharing and a value-added plan were designed and installed. Results -- Productivity improved, communication among the various work process groups improved, and both employees and supervisors were monetarily rewarded for improved operations, productivity, and profits.


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