Remember to set management targets for managers

🎯 Remember to set management targets for managers, in accordance with the so-called new law on chimneys,’ reminds attorney Aleksandra Wozniak, an expert in labour law topics and co-founder of the BWW law firm.

📅 The first quarter of the calendar year is, in many cases, the time for setting management targets for executives. This may also apply to entities that are subject to the so-called ‘chimney law’, where board members are entitled to variable remuneration dependent on the achievement of targets. In their case, the variable part of the remuneration represents the supplementary remuneration for the Company’s financial year.

📚 Those eligible are most often board members and senior and middle management. It is worth noting, however, that there are systems that provide for the setting of targets for all employees.

👩‍💻 This is not only a purely formal obligation on the part of the employer, but above all an important motivational element. For the other side, in turn, it is an important component of remuneration. From the HR side, the failure to set management objectives can act as a demotivator. From the perspective of legal practice, it should be added that, in extreme cases, it can end up in litigation in court.

⚖️ Therefore, in addition to indicating objectives, it is necessary to clearly define their importance and objective and measurable criteria for their achievement and accountability. Examples include, for example, financial objectives (increase in profit, reduction in costs), personnel objectives (increase in employee retention, increase in work efficiency) or sales objectives (achieving a certain level of sales). This catalogue is open and depends on the specific nature of the entity and its activities.

➡️ According to mec. Wozniak, the so-called new Chimney Law forces the setting of targets for board members, as it provides for the total remuneration, which consists of a fixed part and a variable part.

– And the receipt of the variable part is contingent on the achievement of the objectives. Another issue is the level of the variable part, for which the law only provides for a maximum value (it does not provide for a minimum), points out the co-founder of BWW.

📃 The source of the obligation to set targets may be statutory provisions, e.g. the Chimney Law (Act of 9 June 2016 on the principles for shaping the remuneration of persons managing certain companies), resolutions of the bodies of legal entities or bonus regulations.