Should Businesses Pay Bonuses Based on Profit or Based on Performance?

Guests: Nyanna Williams: Founder and CEO, Lifespan Water Bronhil Thompson: CEO - HRM Options Group of Companies Welcome to Your Business Matters, a podcast of EXIM Bank Jamaica where we bring thought leaders together on thought-provoking ideas and methods to help grow your business Bonuses are additional payments made to the compensation package of employees. They are great at improving employee morale but can swiftly become an idol of entitlement if not calculated and distributed strategically. Different bonuses serve purposes as targeted by the company. For example, a retention bonus is geared towards fostering loyalty in an employee especially if they are a top performer while a signing bonus is usually offered to top talents during the recruiting process and is mostly found in the sporting ring where sharp athletes are concerned. But how are bonuses allocated and does it really matter? One might argue that there  is no issue where bonus payouts are concerned as long as the employees get paid and the employer is satisfied but on the flip side, are employers biting off more than they can chew with bonus incentives? If the company falls below the targeted profit margin, what then? And does it make sense to grant such an incentive to below-average employees? Find out on this episode of Your Business Matters. Some of what we discussed include: Are all employees hired to achieve the company’s bottom line? The measurement of employees. Does paying bonuses based on profit even when there are top performers in the company, breed disloyalty? Retroactive bonuses. Is it fair to pay bonuses to employees who perform below average? We also touched base with a member of our audience Jessica Jackson who posed this question to our guests “Should companies compensate those persons who go close enough to the target?” Connect with our guests: Connect with Life Span on their  website at LIFESPANSPRINGWATER.com. You may also contact HRM group at HRMOPTIONSGROUP.com. Thank you for joining us on Your Business Matters hosted by Heneka Watkis-Porter of the Entrepreneurial You podcast. Remember to join us next week for another exciting episode with our thought-provoking leaders as they debate thought-provoking ideas and methods to help grow your business and move closer to your goals. To stay in touch, you can connect with us on your favorite podcast platforms at ‘Your Business Matters’ where we bring the matters to the table or visit eximbankja.com for further information and business resources. As you continue to mind your business, I leave with you this quote from Ashley Bartley "If I win, it’s a bonus. If I lose, the sun still comes up the next day, and it’s all good ” Take care.