IS BONUS BANKING THE ANSWER?

Is Bonus Banking the Answer?



Is Bonus Banking the Answer?

Bonus Banking

Bonus is a sum of money or an equivalent given to an employee in addition to the employee's usual compensation. Bonus banking is an incentive scheme in which the earned bonus is held back in a bonus account and paid in the following years. It allows for the declaration of a negative bonus where performance is not good or up to the mark. It is closely related to a bonus claw back, but has the added benefit of providing the company with some security for repayment.

Incentive

High-performance organization management, so that they can accurately predict which innovation is the best and possible to ensure that what they are doing now offer incentives to the expected results. These organizations adopt evidence-based management approach. They understand that reward management is not just a soft art, science and evidence-based approach is now increasingly used in general management, can be easily applied in the award area. However, despite the salary budget, the cost of rewards and benefits scheme is very obvious, with advanced information systems and human resources shared service centre in the balanced scorecard and the almost universal spread widely used base pay, many companies seems to be no concrete evidence to Practice has proven that their assessment or reward (Berger 2007, 896).

Types of Incentives

Incentives can be divided into financial and non-financial, but would be more convenient to be classified as more of their competition and cooperation. People in groups and organizations make significant efforts to achieve a common goal to work together to create a better learning and education to improve the level of industrial production. The long-term incentive will be used as a force to promote it is used as a means to an end. Increase in the direction of the end of the year award activities.

Long-term Performance Incentives

It is a long-term incentive for superior performance, the average return to shareholders for administrative staff. Long-term incentive mechanisms to encourage managers to take risks with the company's assets led to the interests of shareholders, or they may be avoided. Like a risky project, leading to radical innovation, change the competitive rules of the game for investment. Long-term incentive period is 2 - 5 years. This may be in stock or cash in the form (Armstrong 2005, 155).

Short-term Performance Incentives

It rewards short-term goals for the realization of the management staff. It is based on individual or team managers. It is less than 12 months has the form of cash.

Type of Long-Term Performance Incentives

Virtual Stock

Virtual Stock mirror stock bonus value of the company executives who receive the units, linked to the appreciation of stock value and its cash distribution of results.

Stock Appreciation Rights (SAR)

Stock options and stock appreciation mirror the cash received to strike between the stock price and market value of the difference. It does not need to perform part of the investment. It gives the administration did not give up control of his sense ...