What Is a Bonus Scheme?
Long term bonus plans (Long Term Bonus) usually set a long-term performance goal at the beginning of the period (for example, 3-5 years). At the end of the period, the company pays different amounts of bonuses to the incentive objects at the end of the period, depending on the degree of achievement of the goal. For example, for the general manager of a company, if the company's net profit compound growth rate exceeds 20% within three years, pay a bonus of 2 million; between 15-20%, pay 1.5 million; between 10% -15%, pay 1 million; less than 10%, no bonus.
Long-term bonus plan
Right!
- Chinese name
- Long-term bonus plan
- Foreign name
- Long Term Bonus
- period
- 3-5 years
- Purpose
- Incentive object
- Long term bonus plans (Long Term Bonus) usually set a long-term performance goal at the beginning of the period (for example, 3-5 years). At the end of the period, the company pays different amounts of bonuses to the incentive objects at the end of the period, depending on the degree of achievement of the goal. For example, for the general manager of a company, if the company's net profit compound growth rate exceeds 20% within three years, pay a bonus of 2 million; between 15-20%, pay 1.5 million; between 10% -15%, pay 1 million; less than 10%, no bonus.
- For companies, long-term bonus plans can reduce the risk of incentives. On the one hand, the incentives for employees are paid incentives, that is, only to achieve the company's stated goals. On the other hand, for newly recruited executives, due to the uncertainty of their ability to recognize, it can reduce the cost of paying cash awards in the current period. For employees, because the performance response is in a long period, if there is a short-term short-term performance, there can be some room for improvement and the benefits will not be severely affected immediately. Some transitions and reserves are required for certain development Business, especially effective.
- Long-term bonus plans also work well for some state-owned enterprises. Taking into account the fixed-term tenure of senior executives, the company's performance standards and reward methods can be set during the tenure, as in the above case, it is also convenient to evaluate and reward their performance during their tenure.
- Shanghai
- Economic consulting