Incentive Program for Accounting Firm
I have been asked by a client to look at alternatives for an Incentive / Bonus program for a small accounting firm. Their current scheme is based on the following formula
5.1 Each month Participant’s achieve billable fees
5.2 Each time an invoice is raised time is allocated to each Participant at the sole discretion of the relevant partner
5.3 If a Participant‘s total fees billed per financial year is 2.8 greater than the base salary paid to that Participant the Participant will be entitled to the following proportion of the total amount to be paid in incentive payments:
5.3.1 First $5,000 eligible for 20%
5.3.2 Next $5,000 eligible for 25%
5.3.2 Remainder eligible for 30%
Example
Participant Base Salary: $80,000
Total Billable Hours 09/10 financial year: $235,000
Bonus start point (2.8 x $80k) $224,000
Amount to be calculated ($235k - $224k) $11,000
First $5,000 * 20%: $1,000
Next $5,000 * 25%: $1,250
Remaining $1,000 * 30%: $300
Total Bonus to be paid $2,550
As you can see the ability to earn is severely impacted by the partner's allocation of invoice $'s to particular employee's and then the actual amount paid to a participant is rather low.
Does anyone have any experience with Incentive Schemes in a similar industry that would drive growth but also reward exceptional performance?
Thanks
Emily
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