The motivational requirements of those working in project set-up are usually different from those working as independent professionals in an organization. But both project managers and team members like to be offered incentives for their work throughout a project.
Some of the key factors that help develop suitable bonuses for project managers include the following:
Output or productivity based bonus schemes are primarily used in the manufacturing industry, e.g. production of cotton garments. However, they are now also being used in various other sectors. For instance, it might be helpful in measuring the amount of time taken for completing a job from when the details were first received. In such cases, high productivity might naturally equate to impressive customer service.
2. Budget Management
Revenue-sharing bonuses typically focus on savings and cost reduction. This is a formula-based bonus scheme which allows a project manager to get a share of the total financial gains/savings accrued by the company owing to improved performance. Reworks can have a significant impact on the overall project budget and are hence best avoided.
Just like output based bonus schemes, quality-based bonus schemes have been relatively popular in the production industry. This is because it is simpler to assess and measure quality by identifying defects found each day/week/month or during the project period. But the service industry is also increasingly using this type of bonus scheme for motivating project managers. For instance, the organization might set a target for the project manager to capture a certain amount of accuracy or measure crucial success factors.
4. Customer/Client Satisfaction
Success in the field of client or customer satisfaction is one of the key factors that helps develop a bonus scheme for project managers. An increasing number of businesses are now including client/customer service in bonus calculation. Several companies measure client satisfaction through final project reports and feedback and/or by conducting customer surveys.
5. Organization and Resource Management
One of the most important factors determining the success of a project is organization and implementation of tasks and resource management (sourcing, maintenance and allocation). A project manager needs to decide on the suitable allocation of resources across projects and ensure proper division of tasks as per the skills and capabilities of various team members. Success in this area can be one of the crucial criteria that could qualify them for a bonus.
Numerous companies develop bonus schemes for project managers on the basis of achievement of set financial targets, primarily profits earned. Usually, when projects goals are aligned with overall business objectives, the results help in the financial growth of the company.
7. Team Work
A lot of companies consider effective teamwork to be a key factor in bonus development. A project manager plays an important role in ensuring good team work and may be offered a bonus for his/her success in team management.
Here’s a good formula for calculating bonus or commission for a project manager:
Bonus/Commission = 40% OQ + 20% OC + 20% OS + 20% OT
OQ= On Quality
OC= On Cost
OS= On Scope
OT= On Time/Schedule