Performance Bonuses
Profit Packed
Investment Decisions

The third bucket is the performance bonus bucket.

An effective succession planning program is enhanced by performance bonuses. Performance bonuses can have a dramatic effect on the profitability of a company if used correctly.

One of the best investments a company can make is to encourage behaviour that increases profits. Performance bonuses can be a waste of money if not properly executed.

It is important to note that performance bonuses do not require an employee to be a shareholder. This is an important distinction.

Some shareholders and even non-shareholders may contribute to profitability more than others. The performance bonus bucket is where a strategic board of directors can invest profit wisely to earn higher profits in the future and facilitate succession planning.

Many companies believe that a democratic distribution of performance bonuses is the best way to distribute profits.

This can have an inverse effect on profitability.

The best employees often become discouraged when they are lumped in with everyone else and not singled out for their outstanding contribution to company profitability.

Outstanding employees generally leave democratic profit distribution companies for firms that reward them for their ability to grow profits.

Profit Distribution