Well-earned bonuses are important for your key employees. They might be in the form of cash, or perhaps some shares of stock. But keep it simple. You don’t want a bonus dependent on too many variables – that can put earning the bonus outside the person’s control, creating frustration rather than motivation. Keep bonus conditions relatively few, under the person’s control, and reflective of the sort of performance you’re trying to encourage.
For example, if you’ve set a turnover goal (achieving a certain turnover rate) make sure that the conditions to be met for a bonus are specific. Time frame, budget, etc. – all clearly stated, and all demanding but realistic. Setting unreasonable or unattainable goals can be very counterproductive.