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Bonus 2021/2022

BONUS STRUCTURE 2022 Rolling Quarterly

*“BONUSES ARE BAD FOR FLEXIBILITY” Reed Hastings, Netflix*
***Creative work requires that your mind feel a level of freedom**. If part of what you focus on is whether or not your performance will get you that big check, you are not in that open cognitive space where the best ideas and most innovative possibilities reside. **High performers naturally want to succeed** and will devote all resources toward doing so whether or not they have a bonus hanging in front of their nose.*

The bonuses will be assigned quarterly and will be governed by two macro policies:

  1. Safety Rule

  2. Impact Bonus Index [IBI]

  3. Safety Rule

  4. Impact Bonus Index [IBI], ABCD

  5. How to apply IBI, notes by type of work / area. Examples

  6. Example

=1. Safety Rules=

  • Quarterly Company Safety rule : if 60% of the end quarter’s company goal (turnover trigger) is reached, then the Individual safety rule is unlocked.
  • Individual Safety rule 80-50: if 80% of the end quarter’s individual goal is reached, then 50% of the period bonus is unlocked (unlocked means that it is evaluated on the IBI model, see below), which will be paid in advance in the first month's payslip next useful. In case of failure to reach 80%, there is the possibility of recovery in subsequent periods, until the end of the year
  • The unlocked bonus is awarded after an assessment between the person and the manager, which must be recorded in a report (we will develop a starting model)
  • During the assessment, the good work and the impact obtained using the IBI model will be assessed
  • However, it is very important to give constant feedback to avoid "end of year" surprises
  • Annual Company Safety rule: if 60% of the end of the year's company goal (turnover + gross margin triggers) is reached, then the Individual annual review is unlocked, in order to quantify your final annual bonus ( net of quarterly upfront payments).

Both hard skills (for DEVs, for example, on good programming skills) and soft skills (for DEVs, for example, how aligned they are with values ​​and in the relationship with colleagues) will be evaluated.

The general policy will be homogeneous within the various departments, but if the director of one team wants to adopt ad hoc policies, he can move independently (but in any case shared with the other directors and on this document).

=2. Impact Bonus Index [IBI], ABCD= Impact measurement model obtained on 4 levels: A, B, C, D.

Note for the future:

  • *in some companies, when one or more D's are reached, a Personal Improvement Plan [PIP] starts. We are considering whether to hypothesize it. Basically the "Keeper Test" is preferred (*https://jobs.netflix.com/culture)
ABCD
Impact Bonus IndexExtra bonus (can reach 200% or more)100%50%0%
  • A: Great and amazing impact, we didn't expect this and want to give you an extra and super award for it
  • B: Really good work, so the bonus is 100% part of the fixed salary
  • C: Not really good work, needs improvement
  • D: Inadequate work, far from the expectation

A: Great impact, we didn't expect it and we want give you a prize for that​

In this situation the person stood out to achieve impressive results. Similar to a stretch target. The bonus that will be paid will be greater than 100% depending on the impact obtained.

The bonus has no limits in power and it is expected that it can also be double.

Examples:

  • for a sales, to close a particularly relevant contract (eg:> 500K € single contract) or to enter a foreign market overwhelmingly with an important customer (eg: acquiring a dominant position on UBS)
  • for a developer, the development of a product (or piece of product) that can make a substantial difference on the market, competitors do not have it and can be sold at very high values ​​(eg: facial recognition system that detects the emotions of the testers during the use of the app, applied to our videos)
  • for a CSM, reaching very high penetrations on a customer and extreme satisfaction declared with a public share
  • for marketing, collect 5x leads thanks to an initiative or get to relevant magazines in the sector
  • for the team crowd, create engagement processes for a certain type of crowd that allows us to scale an important product. For example, devising processes and organizing a new guild that deals with operations that reduces internal effort by 50%, or organizing a new guild that allows us to reach 5000 certified EH in 3 months throughout Europe.
  • etc.

B: Really great job, bonus is part of based salary​

The person does a great job and has a great impact on the team and the results achieved. He didn't show anything out of the ordinary (previous point) but he did a great job and the manager is very happy with what he did. The bonus becomes part of the base at 100% (as if it were all base salary).

C: Not really good job​

It is the most difficult evaluation of the four. The impacts are limited and the manager is not 100% satisfied with the person's work, but basically it's not that disastrous. 50% of the bonus is intended as a stimulus to identify areas for improvement to have a great impact on the team and on the results obtained.

If there are several C's in a row in the quarters, he is probably not the right person for that role or what is expected.

D: Inadequate job, far from the expectation​

The bonus is not in question. It is questionable whether the person is holding the correct role in the team or in the company. We also discuss possible help in finding a better team. Those who repeatedly make the same things wrong without learning it is right, for the respect of everyone and first of all for themselves, that they devote their energies to another job / task that is within AppQuality or in another reality.

=3. How to apply IBI, notes for managers by type of work / area.= “BONUSES ARE BAD FOR FLEXIBILITY” Reed Hastings, Netflix

Creative work requires that your mind feel a level of freedom. If part of what you focus on is whether or not your performance will get you that big check, you are not in that open cognitive space where the best ideas and most innovative possibilities reside. High performers naturally want to succeed and will devote all resources toward doing so whether they have a bonus hanging in front of their nose or not.

So the bonus is NOT a tool for performance’s measure. But rather to reward a person's great impact. If the person works well and we are satisfied, it becomes an integral part of the base salary.

For devs, I expect a very close approach to the subject of creativity. So even more polarization on the bonus: either it is given or it is not given (which however means questioning the person in the team). There is no fixed rule for evaluating a creative work but rather it is the manager who must continuously give feedback and evaluate the work done.

For Sales, on the other hand, I expect evaluations that are more connected to numbers. Either it is sold, or it is not sold.

As a general rule:

  • Marketing (for the communication part), tech team, crowd team, executive people are in the creative space
  • Salespersons should be measured for sales numbers
  • BDR (Business Development Representative) based on the number and quality of leads collected
  • CSM based on customer satisfaction and generated upselling
  • Finance a more hybrid role, there is a theme of creativity but also capacity of control

=4. Example=

  • Total compensation: 50K fixed + 30K bonus

  • If in Q1 at least 60% of turnover is made (Quarterly Company Safety Rule), 50% of the quarterly bonus (€ 3,750) is potentially unlocked. Go to the next step.

  • Individual Safety rule 80-50: If in Q1 at least 80% of your quarterly targets are met ( i.e. you get at least a C in your IBI evaluation), the 50% of your quarterly bonus (€ 3,750) is definitely unlocked.

  • At the end of the year, the annual company performance ( turnover + gross margin VS. budget) is evaluated (according to the Annual Company Safety rule). If the Annual Company safety rule is fine :

  • According to the IBI review we can have this kind of summary:

    • Q1 - score C --> 50% of the 50% of the quarterly bonus unlocked --> 1.875€
    • Q2 - score B --> 100% of the 50% of the quarterly bonus unlocked --> 3.750€
    • Q3 - score A --> 150% (for example) of the 50% of the quarterly bonus unlocked --> 5.625€
    • Q4 - score B --> 100% of the 50% of the quarterly bonus unlocked --> 3.750€
    • Total Upfront payments : 15.000€
    • Annual Review (if all triggers are ok!) - Score B --> 100% annual bonus unlocked : 30.000€ (to be compensated with upfront payments) Bonus still to pay (usually in March) : 15.000€