These sample percentages are based on a successful bonus program from profitable, real-world, construction and disaster restoration businesses. We’ve compared bonus programs at other successful businesses and seen similar percentages. However, your particular market could be quite different, so base pay, revenue and margins could go up or down based on your particular market. Don't take these values as gospel; they may not be exactly right for your business. Don't announce the program until you have tested it with your business and are satisfied with the results.
Many of the suggested bonuses vary depending on the scope of an employee's duties; pay attention to the description of duties to find the closest match. For all of these bonuses:
- lower the bonus if the employee doesn't satisfactorily perform duties in Chronicle (adding/completing documents/activities on time, adding appropriate documentation to the journal, etc.)
- lower the bonus if customer satisfaction is low or negative feedback about the employee is received; raise the bonus if customer satisfaction or job feedback is exceptional.
Sample Bonus Percentages for Salaried Employees
Percentage of Gross Profit to Pay Salaried Construction Employees
Percentage of Gross Profit to Pay Salaried Water, Fire, Packout, Mold, Trauma, Biohazard Employees
Sample Bonus Percentages for Sales & Marketing
Sales/marketing bonuses are not tied to gross profit since sales/marketing staff have no affect on whether a job is profitable; these employees are simply rewarded for the work they bring in.
Sample Bonus Percentages for Hourly Employees
Hourly employees are best evaluated on labor rates since efficiently getting labor completed is the only part of the job they have control over. In evaluating labor rates, labor can be calculated with or without labor burden.
Labor burden is the cost to a company to carry your labor force aside from salary directly paid to them. Burden is the benefits and taxes that a company must pay or chooses to pay on their payroll. Burden includes costs like:
- Payroll Taxes (Federal and State)
- Retirement/Pension Costs
- Health Care
- Life/AD&D Insurance
- Worker’s Compensation Costs
- Long-Term Disability Insurance
- Short-Term Disability Insurance
- Sick & vacation time
Labor burden is typically from 30 to 40% depending on the benefits you offer and how much of those benefits the company pays. You need to periodically reevaluate burden rates because of changes in tax law, health coverage, etc. (Your accountant would typically tell you what your labor burden is for each department.)
Calculating labor rates without labor burden is simpler because you don't have to calculate the labor burden for each department; evaluating labor rates including burden may more accurately reflect your true labor costs. Labor burden is entered on the Production Department Labor Settings tab within the Labor/Budget tab of the main setup. You determine whether labor burden is considering in evaluating bonuses on the Labor % Calculation tab within the Setup tab in the Bonus Manager.
How Bonuses are split Up Among Hourly Employees
Once Chronicle calculates a total bonus amount for hourly employees on a job based on a rule, it then divides the amount among the various hourly laborers on a job. Chronicle's bonus manager does this automatically based on the amount each employee earned on the job. For example, suppose two employees worked on a job, in different amounts. For example, if Sam earned $150 on a job and Will earned $100, Sam would get 3/5 of the hourly bonus and Will would get 2/5.
Percentage of Gross Profit to Pay Hourly Employees
* Suggested % of difference between target and actual to split up among hourly employees: Suppose that 15% is the minimum percentage at which a bonus occurs (as with Water with no burden above). Suppose that a job's labor actually comes in at 10%. Calculating a bonus based on the difference would regard the 5% difference between the target of 15% and the actual of 10% as the eligible amount of bonus.