According to the career advisory company Zippia, one in three US companies offer year-end bonuses. Because larger companies are more likely to pay bonuses than smaller ones, overall, more than 40% of US workers have the potential to receive a bonus. In the manufacturing sector, this number jumps to 55%.

Some of our discussion of bonuses is observational, that is to say what we are seeing in the marketplace. Because bonuses are typically treated just like any other ordinary income for tax purposes, organizations such as the IRS do not require separate reporting, so precise data is limited.

In the plastics manufacturing sector, we are seeing an increase in performance bonuses as part of an overall compensation plan, deeper into the organization. Bonuses once reserved for executive leadership and senior management are now being extended to the key individual contributor level. Zippia’s data supports our observations that bonuses are on the rise, as 61% of the companies they surveyed say bonuses increased from 2020 to 2021.

There is no right answer to what constitutes a good bonus. Remember it is part of an overall compensation package. Jamie Dimon, the CEO of JPMorgan, receives (only) a $1.5 million salary, but with a bonus of $33 million. What is a good bonus for plastics professionals? For key individual salaried contributors, a range of 6 to 12% is typical. For a senior manager or director, 20 to 30% is more the norm.

If you search for something like “pros and cons of performance bonuses,” you can really go down a rabbit hole, but they are here to stay. To avoid some of the obvious pitfalls of bonuses, make sure you are using understandable and measurable metrics to measure performance as it relates to achieving bonuses.

And be aware of your culture around bonuses: Are they a stretch that is sometimes achieved, sometimes not, or are they an expected part of the compensation that is just paid differently? You might recall that Clark Griswold was really counting on his bonus in National Lampoon’s Christmas Vacation.

About the author

Paul Sturgeon is CEO of KLA Industries, a national search firm specializing in plastics, packaging, and polymer technology. If you have a topic you would like to see discussed, a company that is growing, or other ideas for this blog, e-mail Sturgeon at [email protected].