Redoing math on performance bonuses

Bonuses tied to individual performance, not overall company, gaining traction
By Angela Scappatura
|Canadian HR Reporter|Last Updated: 05/04/2009

Companies are changing the way performance-based pay is calculated for mid- and lower-level employees, according to an HR consultant.

Traditionally, bonuses have been determined based on a company’s overall performance. While that is still a consideration, companies have begun taking a tiered approach to bonus calculation, which is increasingly defined based on division, says Robert Levasseur, a senior executive compensation consultant at Watson Wyatt in Toronto.

Incentive plans became prevalent after the recession in the early 1990s in an attempt to keep inflation down on compensation costs, says Levasseur. Since then, companies have been working to refine the calculation process.