Incentive Plans Help me be fair.

We have an incentive plan for the Res Manager at the hotel I work for. Basically it comes down to team revenue and shop scores.

Here’s the problem

Our first Res Mgr left in August. She got 70 and 73 on her scores for first and second quarters. The new manager got 89 & 98 on her shop scores for 3rd and 4th quarter.

Now the incentive figures out the team revenue plus an average of your 4 quarterly shop scores. My theory is why should our current manager be pulled down for lousy shop scores by the first lady. (she works for the same company but at another hotel so she still gets a bonus).

Also why should the first one get a benefit from the second ones better performance.

Basically the formula is enter the salary (prorate if necessary) then add in year end revenue and enter the shop scores by quarter. It then calculates the amount due. As a WHOLE.

I don’t know how it is calculating but something doesn’t seem right just to divde the total sum by 12 (number of months) and multiply that by the number of month each one was there. (first one was there 7 1/2 the second one 4 1/2)

Any ideas?

It would seem to me that you should average the ratings for the person not the position. Take that average multiply by 4 to give a yearly rating, then pro-rate by dividing by 12 and multiplying by the number of months in the position.

In your example you would take the 2 ratings (89,98), average them (93.5), multiply by 4 (374), divide by 12 (31.17), multiply by 4 1/2 (140.25). Is that a reasonable number to come up with. It removes the other person from influencing the numbers.

Or did I get the idea all wrong?


Mark, I don’t know enough about your industry to know what’s fair… you’re a far better judge of that than I would be… but let me propose a couple of things that may help you answer this question in a way you can live with later.

First, you could just average the period of time each person was there. So, for the first one, 70 + 73 + 89/2 (since she WAS there the first half of the third quarter after all) divided by 2.5 = 75. For the second one, 89/2 + 98 / 1.5 = 95.

Assuming that these numbers aren’t seasonal that seems a reasonable way of doing it. Note though that “reasonable” and “legal” are sometimes two different billygoats. If you said “we calculate bonuses according to Plan X” then that had darn well better be the way you calculate bonuses, or you might be found in breach of contract… it’s safer to follow through with the plan this time, and make changes to it so that in the future it’s more fair.

If the bonus plan includes some wiggle room for discretion on your part, though, you might try calculating the bonus under the assumption that all four quarters were 75, multiply that by 7.5/12, and give that to the first person. Calculate it under the assumption that all four quarters were 95, multiply THAT by 4.5/12, and give that to the second person.

If they ARE seasonal, then you’ve got a harder row to hoe. My company historically has tended to derive considerably more than 25% of its annual revenue from the 4th quarter. Someone who worked only in Q1 and Q2 could easily work harder than someone who worked only in Q3 and Q4, and yet have less revenue to point to as a result. Also, we have a fairly long pipeline… it’s not uncommon for a sales rep to finally close a deal a quarter or two after initially starting to work it… so some of the Q3 and Q4 sales might really be a result of the work done in Q1 and Q2.

I doubt that you have the pipeline issue, but I can see whether it’s “tourist season” or not making a difference in the numbers. Also, is is possible that the second one did so much better than the first because the first had streamlined/organized things so well?