Industrial Electronics Bonus
Industrial Electronics, 23-2
Industrial Electronics, Inc. is an electronic equipment company that has annual sales exceeding $ 8 Billion. The company is set up by product line and operates as 16 divisions, reporting to four business managers. Unfortunately, due to the recession and the competiveness of the emerging and developing industry, the bonus pool for the employees has decreased causing issues with employee morale, and can overall affect the profitability of the organization if the company analyzed the ROI of turnover and training. Therefore, the company reviewed the current bonus structure and proposed a new bonus structure for the Division Managers, as they currently felt their contributions to their departments was not being rewarded. The current bonus system focus on the overall goals of the company. Although it is essential to set and communicate company goals, having this one structure as the only measurement for bonus can be detrimental. If one or a few departments contribute to the company not achieving their goals, this means that all employees and departments are not being recognized for their contributions. The current goal is a 10% bonus pool of the company’s profitability after taxes in excess of 12& of the company’s book net worth allocated for the bonus pool.
The proposed bonus structure is set up to drive the performance more directly related to the division, but not does not focus on any overall company goals. In order to stay in business the overall goals and financial metrics need to be a part of the bonus system. The targets for this new structure are set and negotiated during the budgeting process. If the division managers are going to be held to achieve and/or meet these standards their input should be taken into consideration during the budgeting process if they are not directing involved or responsible for the budgets. This will allow the organization to have the buy in and accountability
from the
Industrial Electronics, Inc. is an electronic equipment company that has annual sales exceeding $ 8 Billion. The company is set up by product line and operates as 16 divisions, reporting to four business managers. Unfortunately, due to the recession and the competiveness of the emerging and developing industry, the bonus pool for the employees has decreased causing issues with employee morale, and can overall affect the profitability of the organization if the company analyzed the ROI of turnover and training. Therefore, the company reviewed the current bonus structure and proposed a new bonus structure for the Division Managers, as they currently felt their contributions to their departments was not being rewarded. The current bonus system focus on the overall goals of the company. Although it is essential to set and communicate company goals, having this one structure as the only measurement for bonus can be detrimental. If one or a few departments contribute to the company not achieving their goals, this means that all employees and departments are not being recognized for their contributions. The current goal is a 10% bonus pool of the company’s profitability after taxes in excess of 12& of the company’s book net worth allocated for the bonus pool.
The proposed bonus structure is set up to drive the performance more directly related to the division, but not does not focus on any overall company goals. In order to stay in business the overall goals and financial metrics need to be a part of the bonus system. The targets for this new structure are set and negotiated during the budgeting process. If the division managers are going to be held to achieve and/or meet these standards their input should be taken into consideration during the budgeting process if they are not directing involved or responsible for the budgets. This will allow the organization to have the buy in and accountability
from the