Question

In: Operations Management

Your Objective : Design a bonus compesation package for an Employee Scenario: Gulf corporation is a...

Your Objective : Design a bonus compesation package for an Employee

Scenario: Gulf corporation is a company engaged in the trade & manufacturing of medical devices. Lately, the company has been suffering from achieving its profitability objectives. The managing director has decided to introduce an incentivge program for each employee in order to improve business performance and attain profitability effectively. As Head of HR department, you have been assigned to complete this task. Your Parameters are as follows:

1. You need to design a bonus incentive package for only 1 employee of your choice.

2. The employee's job and role is up to you to decide. He may be an Accountant, Sales Executive or etc.. Please indicate your chosen tittle below.

3. The salary structure of the employee is shown below: Basic $5,000.00 Allowances $5,000.00 Total $10,000.00

4. Targets or goals are up to you to establish or determine with due consideration to the above information about the company.

The requirements:

1. You are required to show your detailed computation and their respective descriptions.

2. Justify why you have decided to choose this Bonus Plan or why you have designed it that way.

Solutions

Expert Solution

a. let us decide on the bonus structure of the sales employee and following would be the design elements of performance bonus:

Bonus Range; Performance bonus would range from 5% to 20% of total annual compensation, subject to achievement of the target percentage as indicated below:

Sales Target achievement percentage Bonus percentage of $10000 Compensation
Less than 80% 0%
More than 80% less than 90% 5%
More than 90% less than 100% 12%
More than 100% 20%

b. Through this bonus structure, the first attempt is to set the minimum achievement level which is 80% of the target, second, there has been pull given at incremental rate as the achievement of the target becomes tough as we can see for 80-90 there is an increase of 5% but for 90 to 100 there is an incremental increase of 7% and similarly, for more than 100% target achievement the incremental increase is 8%.

Therefore, this bonus structure will reward the effort and outcome equilibrium and the employees will try to achieve the set goals.

keosha answered 1 year ago
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