Quote:
Originally posted by JTO
I need to know what is considered convention for awarding performance bonuses to employees that make a significant contribution to a business. For example, if a unique idea allows a company to avoid spending $4 million on some equipment, how should the person be compensated for the idea and developement work?
Thanks for your thoughts,
Troy
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So are you looking to give a bonus or wondering about receiving one?
You say you're looking for what is considered "convention" in performance bonuses, but I don't think there really is a convention.
Like LubeMaster comments, a bonus is a "gift," but I would add, that while "saving the company money" should be part of every employee's job, a company should want to reward extra-ordinary behavior if they want to keep good employees and encourage all employees to give their best. (A lot of companies don't have enlightened enough owners/managers to understand that idea.)
If you're the employee and are not satisfied with a bonus received, I would suggest looking for another job where your skills and talents would be more appreciated.
If you're the business owner looking to give out the bonus, I'd say give something generous, but not too extreme that it might create unreasonable expectations for other employees if they come up with a great idea.
If it's a small business, consider what the employee might want and how important he/she is to the business; is this someone who would want to be a part owner in the business? Few things motivate people better than when they have an interest in the business they're working for, but there are some who just prefer the 9-5 routine, a paycheck and no headaches about the job when they leave each day.