Stop tying individual bonus to individual goals for non-sales roles.
I can’t tell you how many organizations that I’ve talked to recently that don’t realize that they are incentivizing their non-sales employees to forget about the whole job, but rather to get the bag of cash promised for achieving the arbitrary goals they set 12 months ago. Don’t do this, my friends. You will soon find out that you’re paying more than you ever have, and not getting much more for it. Here’s what to do instead:
Definitely create goals for your employees. But make sure they are in clear alignment what the department is planning to achieve and what the company is planning to achieve. Be ready to talk about how the individual employee impacts the organization.
Ensure you can talk about how the goals fit into your employees’ holistic performance evaluation - and how that holistic view drives compensation - including bonus. Give merit and bonus payouts based on performance level rather than goal achievement.
If you are going to put a contract in place that is “money for goal achievement" (which I highly recommend you rethink), don’t put organizational level metrics on the individual bonus “contract.” Unless the employee is an executive, it’s demotivating and feels unsurmountable. Instead, design your bonus to fund at the company or business unit level.
If you’re mid-sized, now is the time to start thinking about your bonus structure for next year. Don’t wait until you’re at the end of 2021 and need to hustle or keep something mediocre. Do it now!