ABSTRACT
This chapter summarises the potential effect of short-term bonus systems on safety. Annual bonuses are awarded to people at many levels in the hierarchy, not just to the CEO and direct reports. The group measures contained in annual bonuses— such as profit and production figures and safety statistics— must relate to one or other of these groups. Individual and group performance must be combined in some way for the purposes of bonus determination. The target bonus is often expressed as percentage of salary, and the more senior the employee, the greater the percentage. Interestingly, several companies had financial gates that could block the payment of annual bonuses. Short-term bonuses generally had two components, relating to group and individual performance. Paying bonuses to employees on the basis of group performance looks surprisingly like profit-sharing for its own sake, a totally different proposition. As for individual performance, performance expectations are set out in individual agreements.
