What is the difference between a bonus and an incentive ?

A quick post today, on the difference between a bonus and an incentive. We often use these two terms without making a true distinction, but in truth, they are slightly different. Both of them cover elements of compensation that go above and beyond the normal, recurring income of the employee (base pay or basic +…

The 3 final steps to your bonus calculations

It’s bonus time and you have prepared all your calculations as per the rules laid out. Before going to your CEO to show her the numbers, go through this checklist to ensure you have covered most angles and provide value to the discussion. Check the eligibility list one last time. Who are your new joiners…

The shelf life of compensation plans

One of my friends contacted me recently, complaining that the Sales Incentive Plan that his company introduced a little over 4 years ago, does not seem to “work” any longer.The Sales people are not motivated, results are down and employees are complaining about how their incentive is structured. He even says that it is whispered…

Why the Sales Director has less on-target incentive than the Sales people

At previous organisations with a sales force, we had to determine rules regulating the split between fixed and variable pay for the population eligible to the Sales Incentive. Besides benchmarking with other companies in our markets, we used an internal logic. We would start from the bottom up ie define, first, what a sales role…

Why am I not on the Sales Incentive Plan?

When I was working in the IT industry, there was a lot of talk about the sales population. Obviously, their success was central to that of the organisation, and given the complexity of the products and solutions, the scale of some of the contracts, and the competition in the marketplace, my employers were looking at…

Analyse my SIP!

My friend took this job at a frozen food company in the Middle East. About one month on the job, he called me and said : “Sandrine can you help me analyse the Sales Incentive Plan which has been in place for a few years ? The GM wants me to give him some feedback…

7 steps to compensation programme design – the basics

I am often asked how to go about a new plan design, or a total revamp of an existing one. How should one approach it ? Is there a methodology ? In my mind there are 7 basic steps to take in order to design a good plan in Compensation & Benefits. They apply whether…