PRP/Bonus Schemes

PRP/Bonus Schemes

We are a small supermarket working to enhance our benefits package. One method already in place is an annual bonus paid to all employees based on whether the store exceeds set financial targets.
However, departments are also set annual targets individually and we would like to pay a second bonus to employees whose departments exceed set financial targets.
Whilst that is straight forward enough, how do we reward the employees whose departments have no financial responsibility? Although they would qualify for the 'store' bonus it seems unfair that employees in departments such as Administration or Checkout would not have the opportunity to gain a departmental bonus.
We have considered using other nonfinancial measures, but what would be considered fair measures? Rather than looking at criteria that would apply to individuals we want to encourage team work.
Another point to consider is that one of these departments employs a large number of people on working holiday visas so has a high staff turnover - we don't want our permanent employees in this department to be at a disadvantage because their temporary colleagues aren't likely to be employed at the time the bonuses are paid out.
We are not in a position to pay bonuses on anything other than an annual basis.
I'd be grateful for any advice or guidance!

Lucie.
Lucie Jerome

Comments

Hi Lucie

We have successfully designed and implemented a number of PRP solutions.Key issue is "what do you want the PRP to achieve?" That will give us an indicator of what should be measured, and how the scheme can be credibly operated for the benefit of the buisness and the individuals benefiting from it. It has to be perceived as being fair.Also look at what KPIs your business curently operates to measure efficiency and cost control, as a robust PRP scheme has to have business focused, solid, objective (where ever possible) measures that can be transparently tracked by both management and employee.

We have used a number of different approaches to deal with short term, temporary and or contractor labour working within the main cohort of the business.

please give me a call if you want to shoot the breez on this, best regards Malcolm01352 706211

LucieI'm not sure I've got an answer for you but had some ideas. Firstly, what are the goals of the bonus scheme. Presumably to improve the financial performance of the company? Therefore how do you link the bonus of non-revenue generating departments to this. You could focus them on cost savings or possibly productivity or customer service?

The easiest way is to link it to a performance appraisal process. I can share the process we use if you want? As well as targeting some personal objectives we mainly focus on team and company goals. Then you revue progress against these and at the end of the year if staff have acheived the goals then they qualify for a bonus.

The other thought that struck me was that if the existing bonus works then why not extend that. Rather than have a set bonus for a set financial, target have a sliding scale. If the company over achieves it's financial targets more money goes into the bonus pool to share with staff. You can then communicate to staff what they need to achieve for the store to hit these extra targets and the non-financial depts can again contribute through cost savings/productivity/customer service.

As for the temporary staff you have in some teams, if you're not convinced you're getting the best performance with them then maybe you need to review your recruitment/staffing policy?

I know these aren't very well thought through but just some ideas for you.

Happy to discuss it further if you want to contact me. Also - if you are in HR in retail I would like to talk to you about some research I am currently doing.

RegardsPaul Flavinpflavin@thehrpeople.com

Hi Paul

Thanks for this, linking performance to savings wasn't something we had considered but could certainly be a way forward. I'd be grateful if you would share your performance appraisal process with me.

I guess telling you a little more about us would be the best way to illustrate why we are considering a bonus scheme.... We are a smallsupermarket in Queenstown - New Zealand's adventure capital, and no, I haven't done the bungee jump! The town has a very small localpopulation (approx 7,000) who are in the enviable position of being able to choose when and where they work simply because of the vast number of employment opportunities here; hotels, attractions, businesses, retailetc. The vast majority of locals are either self-employed or in management positions. Like every other business in town we are reliant upon the annual migration of 'transient workers' (i.e. backpackers) thattravel through Queenstown each staying for a few weeks at a time and seeking short term work to fund their stay. This is where we draw our checkout operators, night fill assistants and grocery team from.

Businesses in town are in competition with each other to retain the locals they have managed to recruit.

Our team draws a good basic wage, and we would like to pay them more based on performance. This is where the idea of the 'store bonus' came in - where everyone benefits if the store achieves or exceeds target.

However, we are trying to come up with a way of rewarding departmental performance also. The idea behind that is to improve individual and team performance within departments (with the store bonus a team that is underachieving against its departmental targets can still get the bonus because the store as a whole is achieving). If the team know they will get an additional bonus if they reach target then peer pressure should kick in and people will need to work together to achieve the desiredresults.

Whilst that would work in departments that have financial targets, it's our non-financial departments that we are struggling with. Firstly with what to measure (now possibly savings) and secondly how to set measuresthat can't be sabotaged by the transient workers; for example, if we set attendance as a measure then someone who is only here for 3 months (and so won't receive the annually paid bonus) isn't going to worry about taking a few days 'sick' to go boarding on the mountain - it's the locals who are here long term that we are trying to reward who are going to be penalized.

Thank you for acting as a sounding board! I'd be more than happy to help with your research.

Kind Regards

Lucie JeromePersonnel AdvisorFresh Choice

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