Better bonus management critical to company success

More than half of all UK employees benefit from some kind of variable compensation such as bonuses, but many employers are failing to manage this reward effectively.

Analysis by Callidus Software has found 62% of the 23.01 million employees have a variable remuneration package, yet 90% of organisations still use manual or spreadsheet-based methods to manage the process. The firm has said this can lead to widespread errors, a lack of company-wide control and subjective bonuses as seen in the recent banking crisis.

Variable compensation covers the provision of additional benefits to an employee if they hit certain, agreed goals. These can include financial bonuses, sales incentives, stock options or non-monetary rewards, such as extra holiday entitlements or gift vouchers.

Bill Schuh, vice president for Europe, the Middle East and Africa (EMEA at Callidus Software, said: “Companies need to learn the lesson of history and stop managing variable compensation in an ad-hoc or amateur way. Recent events have proven that a tool as complex and powerful as pay for performance cannot be managed manually or merely confined to the sales or senior management teams. It needs advanced, company-wide systems that can take corporate objectives, cascade them across the business and then provide the ability to manage, control and evolve them.”