Bonus!

February 24, 2009 7:13 AM

Hourly bonus programs- anyone have experience / advice?

I have been tasked with creating / implementing an attendance bonus for my company's production workers. These are hourly employees, not salaried.

The bonus would pay out as an increase in their hourly rate of pay as a reward for perfect attendance.

Example: My regular rate of pay is $8.00 per hour. If I meet all bonus criteria for attendance, I will be rewarded with an extra 35 cents per hour for all hours worked during that pay period.

Any over-time I worked would also be calculated at this higher rate of pay if I earned the bonus.

If my attendance record does not meet the criteria this pay period, I stay at $8.00.

It all sounds very simple, but it can't be that easy. Do any of you have experience with an hourly bonus program- whether for attendance, performance, or some other criteria? How did they work? What else should I know?

The bonus programs with which I am familiar offered a flat, set amount. Example- $50 a month for perfect attendance. I have no experience with hourly bonus programs affecting the employee's actual rate of pay.

I'm not as concerned about setting the criteria for earning the bonus. We have a pretty clear attendance policy for these employees, and coming up with a bonus-earning standard shouldn't be too hard.

I am more concerned about the payroll aspects of it, employee response, and any pitfalls or complications that I haven't foreseen. Your experiences will be appreciated!

posted by GuffProof to work & money (4 comments total)

Our incentive program for hourly employees is graduated. If they hit X production, they receive $.50 per hour, up to $2.00 an hour for the best performance. This works great for us, as the employees bought in to the whole process and were able to very specifically relate their performance to their bonus amounts. I would suggest the concept of a graduated system, which seemed to better motivate them to improve their performance and reach the highest amounts.

The payroll part is fairly straightforward. Incentives are given on a quarterly basis. It's pretty simple to total their hours for 12 weeks, and figure the amounts they are due.

The only advice I can give you is that you need to keep making the presentation of the incentives a big deal every quarter. After a few years, it's become kind of ho-hum around here when they "just get" $1.00 for every hour they worked.
posted by raisingsand at 7:38 AM on February 24

I understand wanting to reward attendance, but to you really want to incentive it? If you'd got a super sick person who definitely shouldn't be at work, but knows that if he doesn't come in not only does he lose his days pay but $0.35 for every hour he's already worked (assuming perfect attendance already), he's going to come in, make everyone else sick, and really reduce production.

I wouldn't make it an all-or-nothing thing. For example, if they hit 97.5% attendance (averaging 1 sick day per 2 months), they get rewarded at the max level. If they hit 95%, they get rewarded at a lower level. That sort of thing.
posted by cgg at 7:50 AM on February 24

I don't see why you have to make it affect their hourly pay. Why not make it a bonus amount paid at the end of each quarter or whenever, and the bonus is $x * hours_worked? Then it's just a variable amount bonus, which is pretty common.
posted by jacalata at 8:16 AM on February 24

Thanks for the ideas so far...

My understanding is that this sort of bonus has to be included in overtime calculations per the FLSA... so adding the bonus to their hourly pay seems to be necessary to be in compliance.

I could be wrong about that. And if there's an easier way to do this, I'm all in favor!
posted by GuffProof at 11:02 AM on February 24