Project bonuses: Butteriss on human resources
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Numerous companies, particularly those in the high-tech field, work on long-term projects. In order to reward and retain key employees, many of them are turning to such things as project completion bonuses, or bonuses related to the achievement of key project milestones. Project completion bonuses are different from profit-sharing bonuses because they are paid only when a project is finished. Long-term profit-sharing bonuses are based on the profits of the company as a whole and are generally paid out either at the end of the year or a defined longer-term period.
Project profit sharing is a method that groups employees whose talents match the needs of the project. A point system is set up based on the position of the employee, his or her use of professional development opportunities and his or her contribution to the project. If the project comes in under budget or prior to its deadline, a larger portion of the profits can be shared.
Full disclosure of the profit split is advised in this type of profit sharing. Its advantage over traditional profit sharing is that it provides a faster reward and positive reinforcement. However, companies using this method should be advised that there is a time commitment required to educate staff about it and provide them with other information on expenditures such as R& D. Constant communication is necessary in making the project profit-sharing system work.
In project work, profit sharing can be a worthwhile motivating tool. Participants in theWisdom Exchange, a forum on business challenges co-sponsored by the Ontario government and a number of business service providers, noted that caution must be exercised so that project staff do not rush a job to reap the financial rewards, resulting in an unsatisfactory or returned product. One participating company stated that no profit sharing took place until the cheque came in from the client.
Project milestone or completion bonuses are not necessarily structured and announced as profit sharing, but in most cases they will inevitably be pegged in some manner to the success and profitability of the project.
Project completion bonuses have become very important in order to ensure that a project is indeed completed. These bonuses are not only a way of saying thank-you but of also making it attractive for people to stay to the end of the project.
Copyright© 1999 by Margaret Butteriss. All rights reserved. Published by John Wiley& Sons Canada, Inc.
www.amazon.ca/Help-Wanted-Complete-Resources-Entrepreneurs/dp/0471643882
References
Butteriss, M. (1999).Help Wanted: The Complete Guide to Human Resources for Canadian Entrepreneurs.Toronto: John Wiley& Sons. pp.116-117
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