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The importance of a sophisticated reward policy

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The acute tightness in the labor market is forcing more and more employers to set up a highly sophisticated compensation policy. A strong reward policy views pay not as a necessary evil, but as a convenient means of gaining an edge over competing employers. In our view, such a reward policy encompasses four dimensions:

  • A comprehensive fixed remuneration package (fixed salary supplemented by fringe benefits)
  • An interesting and layered bonus policy (collective and individual bonuses)
  • Ensuring work-life balance (including flexible work schedule, extra leave days...)
  • Investing in welfare and development (including training programs, hospitalization insurance...)

Below, we take a closer look at the dimension in which many employers can still make the most ground: the design of an interesting and layered bonus policy.

A strong bonus policy is indispensable today to motivate employees. However, an insufficiently well thought-out bonus policy overshoots the mark. It is therefore crucial to think carefully about which bonuses you want to grant to which employee. When setting up a bonus policy, it is best to work at three levels


1 The base layer: a nice collective bonus for the entire staff

The first layer concerns the introduction of a collective bonus, i.e. rewarding your employees as a team. A collective bonus not only strengthens the group feeling, but also ensures that your employees will encourage each other to achieve the objectives. A good collective target is, for example, achieving a certain turnover or margin at group level. As icing on the cake, there are also numerous collective bonus systems that allow you to pay out a collective bonus in a tax-friendly manner, for example the wage bonus or profit bonus.


2 Taking it a step further: a motivating individual bonus for managers

By giving a few key employees a nice bonus in exchange for achieving a few KPIs that are crucial for the company, you guarantee that they will be achieved. If you pay out this bonus in the form of 'warrants', as an employer you don't have to tear up your pants for tax purposes.


3 For select key employees: a (profit) stake in the company

The battle for top talent is becoming increasingly fierce. The bonuses for key employees should therefore ideally not only result in short-term financial benefits, but also in a long-term commitment to your company. Granting stock options fits perfectly into that story: by giving your employees a share of the company over time, you give them 'skin in the game': you link their fate to that of the company. In this way they themselves will benefit from the added value that the company realizes through their performance. If you also link the allocation of shares to employment in the company, you have an ideal means of binding these key employees to you.

Want to know more about how exactly to develop a diverse pay policy?


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