We pay bonuses to each team member each quarter based on the results of the projects they participated in during the prior quarter.
We define “results” as profit margin based on our Harvest data. The Harvest data shows our total staff cost for a given project, and our fees earned.
At the end of each quarter:
- The executive team collects all the data on our profit margins into the Cantilever Profitability spreadsheet.
- The executive team publishes this information to the company.
- For each client, we establish a “Bonus Pool” equal to 5% of our margin from that client during the quarter. This pool is then split proportionally amongst the team who worked on the project during that quarter based on the number of hours they worked. The strategist is excluded from this bonus.
- For each client, the strategist for that client earns a bonus of 15% of our margin during the quarter. Strategists have lower base compensation to account for the large bonuses they are eligible for.
This is a new strategy for Q4 2022, and we reserve the right to adjust the bonus percentages at any time.
Example
- Last quarter, we earned $20,000 from ACME Corp. Our total staff costs were $12,000. Therefore our margin was $8,000.
- The team bonus pool for ACME is 5% of $8,000, which is $400.
- During the quarter, the following staff worked on ACME projects:
- Demika: 50 hours
- Rod: 30 hours
- Javis (Strategist): 20 hours
- So the team bonuses paid out are:
- Demika did 50 of the 80 non-strategist hours. She earns 62.5% of the $400, which is $250.
- Rod did 30 of the 80 non-strategist hours. He earns 37.5% of the $400, which is $150.
- Finally, as the strategist, Javis earns 15% of the margin of $8,000, which is $1200.
Bonuses are computed in USD but converted to EUR at time of payment for Danish employees.