Overview
This article explains how clients can add, track, and pay out bonuses to workers alongside salary reviews as part of compensation management.
In a compensation cycle, clients can now manage two distinct types of variable compensation: Target Bonus and Actual Bonus. Managers can input new target bonuses in either a dollar amount or a percentage
These features replace manual calculations for bonus payouts, allows centralized tracking for teams to manage proposed bonus payouts on the same 'plan' page as merit adjustments, and improves rewards communication.
What are Target and Actual Bonuses?
- Target Variable Bonus: This is the defined bonus amount a worker is eligible for, typically set as a flat rate or a percentage of their base salary. Admins and managers adjust these when a worker is promoted, or as part of a typical compensation cycle.
- Actual Variable Bonus: This is the specific amount "paid out" to a worker at the end of a performance period. These payouts are often calculated using factors like the worker’s target bonus, their performance score, and company multipliers.
How to Configure Bonuses in a Cycle
To include bonuses in your next compensation review, follow these steps during the cycle configuration process:
1. Enable Bonus Adjustment Types
In Step 1 (Adjustment Types) of the cycle configuration, you can toggle on the following options:
- Target Variable Compensation: Enable this to allow managers to request changes to a worker's target bonus amount or percentage.
- Actual Variable Compensation: Enable this to allow managers to input the final payout amount for a worker’s annual bonus, as a percentage of the target variable bonus
2. Manage Target Bonus Frequency and Type
When configuring target bonuses, we support multiple attributes stored in the worker profile:
- Types: Flat Rate or Percentage.
- Frequencies: Annual, Quarterly, or Monthly.
Once a cycle is Active you can still add target bonus components, but you cannot remove them if they were already part of the configuration.
Managing Bonuses on the Plan Page
Once the cycle is live, managers and admins will see updated functionality on the Plan page:
- New Data Columns: You can view specific columns for Current Target Bonus, New Target Bonus, and the Net Change (in both % and currency). For payout cycles, columns for "Actual Bonus ($)" and "Actual Bonus (% of target)" will be visible.
- Flexible Inputs: Managers can input new target bonuses in either a dollar amount or a percentage
- Automatic Recalculations: If a worker receives a salary increase or promotion, the system will automatically recalculate the new target bonus amount to reflect the updated base salary.
- Total Request Calculations: The top of the Plan page displays the total sum of all target bonus changes and actual bonus payouts requested across the team. Users can toggle the sum of target bonus changes to be the incremental change in the sum of bonuses, or the gross sum of bonuses.
Additional Considerations
- Actual Bonus Prerequisite: To input an "Actual Bonus" payout, the worker must already have a target bonus assigned to their profile or contract within Deel HRIS. If no target bonus exists, the system will display an error message instructing the user to assign one first.
- Exporting Data: When a cycle is closed, client admins can export all bonus data. The export will include specific columns for current and new target bonuses, as well as actual payouts in both local currency and percentage of target.