A good bonus scheme must be both subjective and objective. Setting down a criteria and clear Key Performance Indicators (KPI) must also be balanced with subjective assessment of how the results were achieved.

Jonathan Mamaril, Principal & Director at NB Lawyers says that bonus schemes if properly drafted and is clear and transparent will increase utilisation of a workforce.

“Subjective bonus schemes are a great way to incentivise a workforce especially people in managerial roles or workers where sales and business development is a main facet of their position.”

“Employers must also be wary that objective aims are still linked to a subjective bonus scheme, in the end if properly drafted it should provide some discretion for rewarding increased performance.” Mr Mamaril said.

The more successful bonus schemes are ones that are properly drafted, clear and transparent, however, other performance outside of the strict criteria should always be taken into account when thinking about bonuses.

“In our experience subjective bonuses are usually given to Employees who are already performing well and an Employer simply rewards that hard work, it is good for staff retention but not necessarily for increasing or growing the business.”

“The most important part of a bonus scheme is one which sets goals that are challenging but achievable but in any event rewards good performance. A bit of both worlds.” Mr Mamaril concluded.

Written by
Jonathan Mamaril
Principal & Director, NB Lawyers – the Lawyers for Employers
07 3876 5111
jonathanm@nb-lawyers.com.au

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