Implementing Effective Business Bonus Schemes - Business Uncut

In this episode of Business Uncut, Ana, a Practice Manager at New Wave, is joined by Shaneel, New Wave's CFO, to discuss the intricacies of creating efficient bonus schemes in businesses. They discuss the evolution of such systems in their own company, moving from solely team-based or individual performance-based schemes to a hybrid model that caters to a broader range of employee motivations.

Shaneel emphasises the importance of transparently presenting the bonus criteria and targets to the employees. Such an approach encourages team members to exert extra effort towards accomplishing goals because they clearly understand the rewards. Ana and Shanil also share experiences of how certain candidates can feel demotivated and confused when their current employers provide poorly explained or non-existent incentive structures.

The discourse dives deeper into ensuring the company's net profit isn't significantly impacted by such schemes. Shaneel insists on crafting a bonus structure that appropriately factors in the business's cash flow projection, whether it is based on revenue targets or net profit margins. The conversation also explores the possibility of extending bonus schemes to non-chargeable staff like admin workers, with links to non-financial KPIs, like job turnaround time or client retention.

The two experts proceed to talk about the rollout of new bonus schemes, stressing the need for clarity and understanding from the managers to the rest of the team. They also discuss potential bonus structures for different industries, such as construction, where profit and project turnaround times may take precedence. The discussion wraps up with important details about cash bonuses, the tax implications and the need for absolute transparency.