TheBonusEffect

How have you been impacted by bonus plans?

For instance, have you helped a co-worker receive a substantial bonus and you received nothing? What was the relationship between you and the co-worker? How did you feel? What did you do?

Another instance, have you had objectives for a bonus that were ridiculous? (I have) How did you feel? What did you do?

What's the thinking behind these compensation plans? What can be done to change the thinking.

SteveSmith 2005.08.18

Whenever I talk to a new believer in bonus plans, I roll my eyes and they either think I don't understand or get nervous. I have been dealing with companies who give bonuses instead of higher salaries since the late 1980s. The bonuses were all dependant on "SMART" objectives, most of which were assigned by management.

My all time favorite ridiculous objective was that my department was to cut sick time by 25%. The 2 of us who had 0 days sick time the year before objected that we should be exempt. We were told we had bad attitudes and the objective stayed. Need I mention that we did not meet it? I have had other objectives that I considered no more realistic than that one, but nothing sillier.

This seems to me to be another tool for management that believes staff needs to be driven to work or they will just goof off all day. It still puzzles me to find it in environments where most people like what they do. It is perhaps the worst thing that ever happens to the quality of projects, as the whole team has a stake in the date and only the date. SherryHeinze 2005.08.18

I've never worked at a place where SMART objectives stayed R(ealistic) or T(imely) for more than a few months. In my experience, which is mostly on the technical side at startups, the bonus is usually that big carrot in the distance called "IPO".

One startup that did try a bonus scheme set up a formula that, per quarter, multiplied individual goal (achievement) by group goals by company goals. When it was pointed out that this favored Sales over Development (since the effect of Engineering on the bottom line was lagged by 2-3 quarters given Sales cycle of the industry we were in), the scheme quietly went away in favor of something less unbalanced. I think the CEO honestly intended to come up with a fair bonus program, but his experience with them was limited to his time coming up the ranks in Sales. I didn't get the impression that he understood that people outside of Sales might have different motivational levers.

--DaveSmith 2005.08.18

Sherry writes My all time favorite ridiculous objective was that my department was to cut sick time by 25%. The 2 of us who had 0 days sick time the year before objected that we should be exempt. We were told we had bad attitudes and the objective stayed. Need I mention that we did not meet it?

Oh my goodness... That's egregiously stupid. <lol> Thank you for sharing a wonderful illustration of bonus objectives gone bad.

SteveSmith 2005.06.18

Oh, lord. Well I'll start with the obligatory reference to Robert D Austin's by pointing to the reviews and discussion on Bookshelved.org.

Yes, I've had bonuses of different kinds for many years. I don't mind "variable compensation." Often I've been paid by the hour or the day - a kind of intellectual piece-work. Seems strange to me that we don't often discuss the bonuses of so-called professionals at the same time as the variable compensation of folks paid hourly with variable hours. Lately I'm an independent, so paid for the work I do, at the pleasure of the people I serve.

I had a chat today with the big-boss, Chairman at my current gig, CEO at the last, where he was kidding me about my rates. Feels good to have validation from that caliber of person that I'm worth what I'm paid - every day I work.

A couple times I had a day job and a bonus that seemed like a game. It's kind of fun to agree to a target that takes a little reaching, and get points you can actually spend if you hit it. If it's a game you share with the boss, even better. We all work and we all win. Many bonuses, and many compensation schemes in general, it seems to me are organized as us vs. them. I'll give you a bonus if you prove that I must, or some such. This is no fun at all, bonus or no.

The few times a typical "bonus" has been attempted with me, it's been unpleasant for all concerned. I am told that I can't be managed, but I can be led. So, show me where we're headed and if I like it, I'll do my part to get us there, and more. The idea of a bonus as an extra motivator is kind of offensive to me. I'll ask to be paid what I'm worth, thank you very much. Given that pay, I'll be a workman worthy of the hire, out of simple respect for myself to start with. If management doesn't have traction without the bonus lever, something else is wrong, and the relationship itself is sour.

Several times I've had a kind of pseudo-bonus of stock, options or similar. It is interesting to me how that offer changes under external pressures. I'm very comfortable with a kind of ownership interest for myself and everyone else. The offer of this kind of interest seems intended to lock in an even deeper kind of servitude mentality than goes with a simple pay-check. Of course, I start acting like an owner, which isn't always the game intended.

I learned this about myself when I pretty much worked myself out of a job with a dot-com at the cost of options worth in six figures right now. Thing is, I couldn't bring myself just blend in, even for that much money. They wouldn't let me *do* anything. For that much money, I kept trying to do things.

Imagine my surprise at myself. I thought I was shallower than that.

-- JimBullock 2005.08.18 (What profiteth a man to gain the entire world yet lose his immortal soul?)

First of all, Sherry, couldn't they do arithmetic? 25% of 0 is 0, so if you had 0 sick days in the current year, you met your objective.

Second, the number one bonus for us techies is to get a nifty assignment next time. Money, after a certain point, doesn't mean that much, but fascinating work does. And if it's not fascinating, we'll make it fascinating (for someone). - JerryWeinberg 2005.08.18

I received a bonus yesterday. I knew it was coming for several weeks, but the senior managers wanted the situation to be right to "surprise" me.

Since I knew it was coming, I had time to think about it. There are many young engineers working here who need the money far more than myself. I wish the money had gone to them.

Reward for me? Like Jerry mentioned - work that I find interesting.

Here is another form of reward. Calculate how many hours of salary the bonus would be (in this case about 100 hours). Let me spend 100 hours at work doing whatever I find interesting using our resources (computers, test equipment, meeting rooms). These 100 hours would be during NORMAL working hours - not nights and weekends.

Another bonus would be for my boss to come to me once a week (month, day, whatever) and say, "Dwayne, I am glad you are working with me. Thanks."

DwaynePhillips 19 August 2005 edited 20 August 2005

During college I worked for a marvelous person. I was the first full-time employee in a sales organization selling proces instrumentation.

I appreciate Chuck Metcalf for his willingness to spend hours chatting about the technicalities involved with manufacturing, instrumentation, and working with people. I consider Chuck one of four primary influences in my life.

I was paid a fair wage. At the start of each year, the previous year's income was calculated and graphed. The current year's bonus was based on an increase over the previous year's results. Each month's results were put on the same graph. At that time in my life, the bonus effect worked, and quite well. DonGray 2005.08.20

Jim Bullock- I'll be a workman worthy of the hire, out of simple respect for myself to start with.

WhatMotivatesYou. Self respect. What a concept. DonGray 2005.08.20

Updated: Saturday, August 20, 2005