Share this content
0
1674

Bonus or Overtime for staff

What do others do if anything?

Didn't find your answer?

Search AccountingWEB

Trying to think of the best way in incentivising (if thats a word) staff.

One option is to pay overtime.  What is the going rate for overtime?  Time, time and quarter, time and a half?  

Other option is to set turnover target and anything over that is split in an agreed %.  To do this you need to set a reasonable turnover level.  It used to be that cost structure was 1/3 wages, 1/3 overheads, 1/3 profit.  So if someone was on a salary of £25k they would be expected to generate fees of at least £75k.  Is this level still relevant today.  With cloud technology etc is the ratio now higher?  3.5 times, 4 times or 5 times salary.

Those with staff, what do you expect your staff to produce fee wise in relation to salary?

Just want to be fair on staff to give them a realistic target but also fair on me that not paying out a bonus for a turnover target that is easily achieveable.

Other option of course is just to pay salary and take on additional staff or offshore some work which others have done successfully.

Replies

Please login or register to join the discussion.

By DJKL
25th Apr 2017 22:27

If you do on turnover the big question is whose, the individual's or the firm's?

The individual's has difficulties as more than one employee may work on a job/fee and sometimes some employees get the real messy stuff because they have a particular skill with it, but if not all hours can be recovered on this work they can be at a real disadvantage.

On the other hand at a firm level resentment can fester if some are seen as coasting but picking up the benefits of the work of others.

If you keep detailed time records, so fees earned can be apportioned ,fair enough , but it will be a fair bit of work.

No easy answer, we ran a branch system when I worked in retail with branch targets and percentage over divided as a bonus in preset ratios, Manageress, Assistant Manageress and sales staff, but that only worked because we knew in advance how many hours each would roughly work in a month, even then it was not perfect.

If timesheet based some sort of target recovery rate might work, for every £1 over preset rate in a month some form of bonus, but it is tricky to do well.

My last practice (when I was employed, back in 1999) looked at these in the round about every six months, but apart from payroll (and we billed that as a distinct line on the fee) I would do virtually all work , met the clients, and partner involvement was limited to file review and sometimes final meeting. I kept a note of all my fees and compared it to salary for the period. Catch was as time went on I did far more office admin and supervision and was also dealing with Investment Business compliance, so my direct recoverable suffered, so it is not easy.

Anyway good luck, I expect these days with fixed fees abounding it is even more difficult.

Thanks (0)
By mrme89
25th Apr 2017 22:34

If I was offered time and a quarter, I'd be going home or going to the pub.

If a manager / boss asked me to do a bit of ad hoc overtime, I'd do it for free out of respect for them. I wouldn't do it for prolonged periods - if that was needed I would be expecting management to address a staffing issue.

You could offer flexi-time. With 'appropriate hours' and rules, along with it being managed well it could work well for quiet and busy periods.

Thanks (1)
avatar
By NeilRH
26th Apr 2017 09:05

I think from a motivational and incentive perspective, it could depend on the individual employee.

If I were the employee, I would prefer something along the lines of a good (not just annual!) appraisal system with genuine/realistic objectives that lead to appropriate salary and role enhancement, and perhaps bonus too. But, I don't work in a revenue generating role...

Thanks (0)
avatar
By Melody
26th Apr 2017 18:56

The basic rule of financial incentives is you get what you pay for - literally! We have all heard of those instances in public life where poorly targeted incentives have had unfortunate consequences. So make sure the behaviour that is rewarded is what is best for the firm.

Overtime can be a valid recognition if staff often have to work additional hours to complete work on time. Time and a half is the standard I remember but that may have changed. The disadvantage is that unscrupulous or lazy staff may deliberately take longer over their work to get overtime pay, but if you have good staff and overtime is agreed in advance and signed off by yourself or a manager that need not be a problem.

Often there is a feeling that it is more "professional" if staff just work the hours needed to complete their job. Staff like to be treated professionally, which includes taking their views into account, but it can become demotivating if they feel an employer is just "taking the p" by demanding excessive unpaid overtime because they are too mean to take on more staff.

Personally I agree with mrme89 that flexitime can be quite motivating and helps staff to feel they are being treated professionally. It also helps staff to fit work around their private lives if they know they can take off a few hours to watch their child in school assembly/leave early for a weekend away/join their music group in a daytime performance or whatever they like to do without having to ask formal permission each time, in return for working extra hours to get particular jobs done. Just set up some rules (all of which can be broken with permission) e.g. core hours (so there is always someone to answer the phones or deal with a client), maximum number of flexidays or flexi half days that can be taken off in a month, maximum time debt/credit allowed at any one time etc. This has very little cost if any and can also help to regulate workflow.

Turnover based bonuses: If based on total firm turnover, it encourages everyone to work together to maximise organisational outcomes, but stronger/more capable staff members could feel they are all being pulled down by any weaker ones (or by any poor management decisions.)

If based on individual revenue generated it must be structured so that each individual feels they have some control and is not pulled down by another worker. Time spent on essential non-job based activities needs to be taken into account. For instance say one of your best staff is also the go-to person for IT queries/spreadsheet queries/unusual VAT queries etc (substitute any field where some staff may advise others). If that person begins to prioritise their own revenue and bonus generation at the expense of helping others who need it, it could reduce your firm's overall efficiency.

Another point to consider is those staff engaged wholly or mainly in admin or other non-revenue generating activities. Their work may be vital to the organisation and the effectiveness of revenue-generating staff, but they could feel excluded by revenue based bonus schemes.

To help you set turnover thresholds and percentages you could consider historical and budgeted revenues and costs, broken down into fixed and variable, direct and indirect.

So the various suggestions each have advantages as well as possible unintended consequences. You can weigh these up in the light of your knowledge of your staff and the volume and type of work you take in.

Finally, how about consulting your staff on this question? Perhaps put proposals for each option you are considering to staff for comments and possibly even a vote. Knowing you want to reward staff and you are listening to their views is in itself a strong motivator. Some of them may come up with good suggestions that might motivate your particular staff even more.

Thanks (2)
avatar
By Mallock
27th Apr 2017 21:16

I haven't found that formula based bonuses work well in the profession - it restricts the desire to ask questions, seek advice and even do the job properly - just wait until you find a bank rec where the outstanding cheques are made up figures from a long departed employee.

I tend to give random bonus payments for extra effort/value and helpfulness and I think it has worked well and the staff appreciate the praise.

Bonus and incentive schemes don't work well, in my opinion, where quality rather than quantity is more important. In a previous firm we had a bonus scheme based on profit on the jobs and it was dropped after 6 months when there was a near mutiny after messy jobs were given to the people who could cope with such a job when other easy jobs (and easier to break budget jobs) were given to others.

Thanks (0)
Share this content