Monday, December 19, 2011

What kind of Year-End bonus do you get ?

It is one of the classic scenes in the movie National Lampoon's Christmas Vacation, but in case you have never seen it, here's a link to the edited (I hope) version:

As you can see, Clark Griswold, receives easily the worst "Christmas Bonus" in the history of mankind.  I love his brother-in-law's reaction (when he tries to put a positive spin on it by calling it "The gift that keeps on giving.")

That is my lead-in to the "Year-End Bonus" spectrum, on which I am VERY HAPPY to fall waaaay on the opposite side of compared to that movie.

At Progressive, we receive an annual bonus at the end of the year called Gainsharing.  It is based on the concept that if the company does well, it's employees should receive some sort of a bonus.  The better we do (against our goals for the year) the higher the payout.  Of course the opposite is true and I was employed at Progressive back in 2000 when we received ZERO bonus (because we were well off from our target goals as a company that year).

Not to bore you with details, but the calculation is quite simple based on a thing called the "Gainshare Factor" (calculating that factor however requires serious amounts of mathematical know-how).  My payout at the end of the year is this: Gainshare factor (1.07 this year) ... X (times) ... Annual salary (like I'm going to divulge that on my blog!  Hah!  Just pick a number between $25K - $75K) ... X (times) ... Your gainshare % (this is 8% for front-line employees and increases with different positions and pay grades ... mine is 12% as a Supervisor).  And now I've just made it sound way more complicated than it actually is.
In short ... 1.07 x $25,000 x 0.12 = Total Gross Gainshare Payout.

Needless to say, if the Gainshare Factor is around 1.00 that works out to about a 12% of my annual salary bonus at the end of the year!
It is awesome!

That gainshare factor is capped at 2.00 (which has happened twice before ... not so ironically in the two years immediately following the ZERO payout fiasco).  That would mean roughly 24% of my annual salary paid out as a "one time bonus."  I doubt that day will ever come again, but I'm always going to hope it will!

One other really cool thing that Progressive does with the payout is this: Only 75% of the Gainshare is paid in December, with the other 25% paid in early February.  This is to avoid an overpayment (since the final gainshare factor has to be made based on expected results for December in order to complete the payout in December).  Trust me, this is a BIG thing to get right!  I have heard stories of the first year of gainsharing when it was all paid out in December and then the final results came in with the company not doing nearly as good as predicted.  Front-line employees were not impacted, but Managers and other Leadership roles supposedly received less on their gainshare to cover the overpayment to the other employees.  Not cool.

So I hope you get a really good Christmas Bonus wherever you work ... if not ... send me an e-mail about coming to work at Progressive!  I love it!  :)



  1. I remember how the Vet clinic I worked for was to share with us if we met our goal. They did about 1 million a year. We were so excited because we knew we would get a share.
    Well..... They needed new equipment and computers and on and on. SO after a year of over working. I got a liberty card (that is a card sold by highschools that give you discounts on the fast food places in town..value about $15.00
    I laugh to this day and have found not to expect anything. Companies don't even send Christmas cards anymore...Hope you have a great holiday , I know you will with that little family of yours
    Love you Aunt Margo

  2. Bonus? I am sorry, can you speak into my good ear? :)