Sharing the pie and distributing the reward: a case of bonus distribution among executives

Abstract

Relevant criteria can be identified and used to partition and disaggregate a project's overall impact value into separate components to be evaluated independently under each criterion. Criteria weights can then be used to distribute the benefit of the joint project to its contributors. There are different interpretations of the criteria weights in different methods of benefit sharing. Project team members are motivated by the distribution of benefits. Criteria weights with different interpretations can be used as part of management incentives in setting up the joint project. In this work, different AHP type models are analyzed for a hypothetical case of bonus distribution to key executives. The implications of appropriate interpretations of criteria weights and local priorities are examined. Other sharing methods are discussed and analyzed. The method of bonus sharing based on the overall priorities of the contributions of all contributors is shown to produce resulting bonus shares that are always proportional to the actual contributions of the executives in the sharing set.