Few buyer bonuses based on individual performance

7 May 2008

8 May 2008 | Paul Snell

Annual bonuses in the purchasing profession are common, but few are based solely on the performance of individuals or departments.

The latest SM poll of 100 buyers revealed 45 per cent receive a bonus based on a combination of performance factors; 15 per cent are judged by the overall performance of their company and 8 per cent on whether they met personal targets.

The SM100 poll also revealed 32 per cent of buyers do not receive a bonus. Most of these respondents work in the public sector. However, another study of more than 500 buyers, released by recruitment firm Edbury Daley this month, found an even higher proportion, 60 per cent, do not receive an annual bonus.

According to last month's CIPS and Croner Reward salary survey, 28 per cent of the profession receive a bonus worth an average of £2,000. A further fifth receive an annual bonus worth £1,000.

Most SM respondents considered a combination of factors the fairest measurement. Many factors were mentioned: customer satisfaction with procurement or individuals, savings achieved, company profit, and sustainability. In most cases company performance determined the bonus level, and personal targets would have to be achieved to receive it.

Most bonuses were pecuniary, but a few buyers said theirs consisted of 50 per cent shares in the firm, locked in for three years, which were then susceptible to the risk of the stock market.

Many public sector workers were disappointed that they were unable to receive rewards based on performance.

"I would welcome a system of performance-related pay increases that could be based on a mixture of the measures, customer satisfaction and savings delivered," said one. "This would provide me with the sort of performance management I crave rather than the current system of annually agreed incremental rises that are awarded irrespective of performance."

None of the respondents were measured solely on departmental performance. Liam Gormley, buyer at Newcastle City Council, believes this is a good thing. "Basing bonuses on departmental performance could lead to better team-work than basing it on personal performance, but there is a danger that it could also lead to increased resentment if particular team members aren't seen to be contributing."


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