how do i create a manager bonus program based on objectives?

Answer 1

This is a big question. It depends on what industry the company is in and what position the manager holds. Does the manager have responsibility for manufacturing, service, sales, logistics, finance or accounting—I am sure I have left some out. The point is different managers will have different goals. Most managers have expense and revenue goals.

Sales managers can have objectives for sales. These objectives can be set in sales dollars, net dollars, units sold, etc.

Service manager goals can be set for expense control, customer satisfaction, creation of new service strategies, customer retention, and things like that.

Manufacturing managers might have goals in units produced, rejection rates, manpower utilization and more.

Logistics managers might be given goals of specific delivery times for spare parts and product, inventory levels, just in time measurements and more.

These are just a few ideas off the top of my head. I know there are many more. Oh, and one last thing; ask the manager to establish some of their own goals.

Answer 2

The objectives need to be tied into the overall company goals.
This is different depending on the industry sector that you are in.
However the common element always seems to be related to the bottom line. So as an example the goal may be to hit a profit percentage of "X". How does each manager reporting to you contribute to that goal? With this in mind set each managers objectives to the main contributors within their areas of responsibility. Quality would be to reduce scrap by a specified percentage. Logistics would be to reduce premium freight by a specified amount as a percentage of sales or manufacturing added costs. Purchasing would be to achieve specified cost reductions from suppliers. Human Resorces would be to reduce lost time accidents and to reduce turnover or unscheduled absenteeism. Finance would be to reduce overdue receivables by a specified amount. Etc Etc.
Each of the objectives tie into the performance management review process and each objective needs to be "SMAC" Specific Measureable, Achievable, and Communicated. The inter realtionship of department to department needs to be effective so one departments objectives doesn't conflict with anothers.
Now each objective needs to be prioritized and weighted as to relevance of the bonus paid. Review these regularly and have a solid method to measure them so every manager knows where they stand at all times.
This is a recipe for success and ensuring that each manager works towards a common goal.

Answer 3

The smart answer is to pay someone else to do it for you... I'm for hire.