How Do You Structure Retention Bonuses for Senior Management in IT Firms?

anila_ms@yahoo.com
Hi Everyone,

I work for an IT firm in Bangalore as HR. I have been asked to work on the Retention Bonus for Senior Management staff. I need help on:
- What percentage of the salary (Gross) to be taken or have a fixed amount?
- What is the normal standard/terms for paying the retention bonus for Seniors? Is deferred bonus pay for seniors OK?
- Sample format of a letter

Please let me know about the above at the earliest. I need to come up with the first draft by 23rd April 07.

Regards,
Anu
svsrana
A good indicator would be at least 30% pay as performance-based. Deferred hold good in case of stock options or in cases where the said incentive is doled out annually and is linked with the share price, market share, etc.

Surya
rajesh2705
Hi Surya, how is a retention bonus given, and what are the considerations we need to keep in mind while designing a retention bonus?

Regards,
Rajesh
neha22111986@yahoo.co.in
In a retention bonus, you can have a fixed amount as well. What I suggest here is that you prepare a fixed amount slab but also mention that it will be performance-based. This can be given as a deferred benefit too. In our organization, until last year, it was 10% of the annual gross salary (which was a good amount in itself) and was subject to productivity, team accomplishments, etc. However, this year we have implemented a flat slab system based on the grade of the manager, and it is provided at the year-end.

Letter Format for Retention Bonus

The letter format can be as follows:

"In view of the excellent performance you have demonstrated in the position of ________, I am delighted to inform you that you qualify for the productivity bonus.

The gross bonus payment amounts to Rs. ____. We are required by law to deduct tax at source from your gross bonus. The net amount shall be directly transferred to your bank account by ____.

We are delighted to have you on our team as you have always managed the responsibilities entrusted to you in an above-par manner.

We hope that you will continue to move ahead on the path of excellence.

Once again, accept our congratulations on the same."

Thank you.
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