I work for a specialty contracting firm in the construction industry. We currently have a compensation system that includes an annual discretionary bonus. I was recently promoted and the "discretion" part is now on my shoulders.
My dilema is that most people are told "if you work hard, it will be reflected in your bonus". The total pool of bonus dollars are a function of the profitability of the company. The profits from this year are typically generated by some process that really occured last year. You might have an individual that really shines, but if the company has a bad year, his bonus would be low. You could also have a great year and a good bonus but that may not relate to what you did.
How do I try to convert our company to a performanced based system? These bonus checks can range from $6,000.00 to $50,000.00. Since there are no established measures, people imagine a certain bonus and then get disappointed at the end of the year. I would like to avoid handing someone a $10,000.00 check and actually de-motivating them!
Thanks in advance.