Save GST, but pay bonuses to employees?
Yes, you should. Bonuses are a part of profit, which businesses distribute amongst their employees. Bonuses are up and above the salary…
Yes, you should. Bonuses are a part of profit, which businesses distribute amongst their employees. Bonuses are up and above the salary and daily wages.
Why?
Employees getting bonuses do not turn away from their responsibilities vs those who work for a fixed salaries.
Employees will take decisions, which lead to profitability, which will lead to bonuses.
It’s a ground up way of instilling business discipline. It does away with the managerial layers.
Bonuses help employees to clear their debt, pay fees for their children and make investments.
Avoid three types of bonuses:
Kevin Hillstrom suggests that higher wages lead to better performances.
Arbitrary bonuses do not value employees who contribute.
Spot bonuses for a job well done pit employees against each other.
Commission bonuses are good for sales, but they should get like everyone else.
Good and bad bonuses:
Lands End gave 10% to analysts, 20% to managers and between 75 to 100% to high level executives.
Eddie Bauer gave 0% to analysts, 10% to managers, and 20% to directors and above.
Nordstrom gave 10% to analysts, 20% to managers, 30% to directors, and 50% to Vice Presidents.
Employees of Semco ( a Brazilian manufacturing company) decide their bonuses.
Learnings:
Paying bonuses is better than not paying one. Lands end performed better than Eddie Bauer.
Daily wagers should also get bonuses.
Business benefit more than the employees.