PAYING FOR PERFORMANCE
Multi-factor bonuses growing in popularity
Traditional forms of bonus plan such as piecework and productivity-based schemes have been phased out in recent years in the UK as multi-factor bonuses have become increasingly prevalent, according to a new study by Incomes Data Services, an independent research organisation.
Wider range of targets
The IDS researchers discovered that there is a growing tendency to include a wider range of targets within bonus schemes. Alongside conventional productivity or financial goals, companies are now including quality, safety, attendance and customer service measures.
Single-factor schemes can run the risk of skewing performance, emphasising output to the detriment of quality or customer service, for example. This is why many recently implemented schemes have multiple measures to encourage employees to deliver a more balanced performance. — Incomes Data Services.
What you’ ll find in this issue of IDS Studies
The 21-page report offers a valuable insight into contemporary trends in bonus schemes. It looks at various kinds of stand-alone schemes — including multi-factor schemes, gainsharing plans and performance-related bonuses.
Seven case studies provide some fascinating detail on what is happening in the real world. The company practice section examines:
their objectives, targets and measurement
employee communications
the level and frequency of payments
an evaluation of how they have worked.
Featured company practice
| Organisation | Bonus scheme |
| BP Grangemouth | Gainsharing based on site-level (output and input) objectives. |
| HP Bulmer | Bonus scheme linked to planned profit targets and team/individual performance. |
| IBC Vehicles | Multi-factor bonus scheme linked to attendance, health and safety, product quality and meeting set production schedule. |
| Norwich Union Direct | Individual performance bonus for call centre operators tied to quantity and quality measures. |
| Royal Mail | Gainshare-style national bonus plan based on performance of work unit. |
| Tesco Express | Store level scheme based on four factors: shop sales, recorded costs, unrecorded stock loss and customer service. |
| TRW Seatbelt Systems | Gainsharing plan covering absenteeism, fault reduction, productivity and plant cost |
Want to know more?
Incomes Data Services is an independent research organisation providing information and analysis on pay, conditions, pensions, employment law and personnel policy and practice in the UK and the rest of Europe.
Title: Bonus schemes , IDS Studies 705, March 2001.
Availability: Contact the IDS customer services manager in London, tel: 020 7324 2599. Or visit www.incomesdata.co.uk/studies/bonusschemes.htm
Subscription details: With your annual subscription you receive 24 issues a year, including four in the expanded StudyPlus format (includes directory of suppliers).
A list of recent IDS Studies together with abstracts can be found on the IDS web site . . . www.incomesdata.co.uk.