Question

Digital Business Incorporated (DBI) is a worldwide manufacturing company that specializes in high technology products for the aerospace, automotive, and plastics industries. State-of-the-art technology and business innovation have been key to the firm’s success over the last several years. DBI has 10 manufacturing plants in six foreign countries. Its products are sold worldwide through sales representatives and sales offices in 23 countries. Performance information from these plants and offices is received weekly and is summarized monthly at the Toronto headquarters.

The company’s current bonus compensation plan focuses on giving rewards based on the utilization of capital within the company (i.e., management of inventory, collection of receivables, and use of physical assets). The board of directors is concerned, however, with the short-term focus of this plan.

Some employees believe that the company’s current compensation plan does not reflect its stated goals of maintaining and enhancing its global position through innovative products.

Required: Develop a bonus package that considers DBI’s strategic goals and the global environment in which it operates.

Answer 1

In my view, Bonus plan is the part of employees motivation as well as an ingredient to continuous contribution. HR department must plan a incentive and bonus plan which suits the company's strategic goals and global business environment. For sales and marketing divisin employees bonus will be in the form of incentives as per the target achieved by them. Here , a bonus based on company's annual sales turnover might be given to employees as per their contribution.  

A merit based approach might be introduced which can only be given to successful employees of the DBI. Product based incentives, group incentives in case of assignments and projects might be introduced.

An MBO ( management by objectives) approach might be introduced in which whole organization will have some annual target and employees will be also distributed proportionally the same target.

Even, bonus can be given cadre or slab basis like top management level, middle level and front line management level .