The Big Shift From Salaries To Bonus-Based Pay (msn.com) 112
More American workers are seeing their compensation tied to performance metrics, a shift from traditional fixed salaries. A 2024 survey by Alexander Group found 28% of over 300 companies are incorporating incentive pay into new roles, extending a practice once limited to sales and executive positions. Employers argue this model boosts productivity, while some workers report earning less than expected, WSJ reported Monday.
Can't plan for the future (Score:5, Interesting)
If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.
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Indeed, it does. Somehow American employers do not get that.
Re: Can't plan for the future (Score:5, Interesting)
Let me guess:
the bonus is based on (e.g.) Jan - Dec, but payroll / annual reviews need a few months to calculate entitlements. So you *have* to remain an employee until March / April to be entitled to the payment. Even more sleazy.
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They need to.
sales contests (Score:3)
So, the question is:
Will you take a job with a $50,000 base salary and a chance to get up to a $50,000 bonus?
And how will you know before you take the job that it's not a $50,000 base + $5,000 bonus in reality?
As another /. user said "how can you plan for the future if your salary is 50% uncertain?"
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I think you missed my point:
"Businesses sure do work hard to make sure they have levers to pull to keep you around." because if they don't, nobody will stay around, and hiring and training new employees is very, very expensive.
Re:sales contests (Score:4, Insightful)
I think you missed my point:
"Businesses sure do work hard to make sure they have levers to pull to keep you around." because if they don't, nobody will stay around, and hiring and training new employees is very, very expensive.
How about these levers? Good work environment, reasonable bosses, minimal layoffs.
I'm reminded of how some/many Wall Street firms use annual bonuses to signal to workers that they are unwanted and should quit. There's no need to speculate about how compensation heavily based in bonuses would work. We just need to look towards Walk Street.
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no need to speculate about how compensation heavily based in bonuses would work. We just need to look towards Walk Street.
True.
In high-bonus land, it is very difficult for job-seekers to know what kind of compensation a given job offer really entails (unless they have a friend or other backchannel). Some firms think a 70% bonus is generous, whereas at others "generous" starts at 700%.
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A bonus is a 'nice to have', a token of appreciation from the employer for a job well done, adjusted for the company's performance that year.
It works (in a sense of being a majority of pay) for sales roles because the value added is easily measurable. It goes with the role, there are plenty of failed salesmen out there who eventually have to find other work.
It doesn't work for software engineers because generally the value added (where 1 is 'expected performance') is between 0.8 and 1.2 across the range at
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I also must point out that bonuses in sales roles (or trading roles) can get extremely high. There has to be a payoff. $500k, not $50k.
I doubt this would work in an engineering firm where everyone was good, then forcibly ranked in order despite all being good, and the bonus being $5k to $500k! There'd be a riot.
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So, the question is:
Will you take a job with a $50,000 base salary and a chance to get up to a $50,000 bonus?
I wouldn't, but that will vary from one person to another depending on how risk averse they are. Plenty of executives have jobs where their bonuses far exceed their base salaries.
And how will you know before you take the job that it's not a $50,000 base + $5,000 bonus in reality?
You won't know before you take the job. As you said, it's "a chance to get up to a $50,000 bonus" not a guarantee.
As another /. user said "how can you plan for the future if your salary is 50% uncertain?"
Duh. You plan your future based on the base salary. And if the base salary isn't high enough for the future you want, you don't take the job. Seems pretty straightforward.
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Re:Can't plan for the future (Score:5, Interesting)
Several years back in government Congress put aside a certain amount of money for bonuses for all federal employees. So, the Senior Executive Service (2000 people) took 50% of that money and gave themselves massive bonuses, the rest of the 2.7 million people had to cut up the remaining 50% for themselves. Thus we see the 'selflessness' of executives.
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One thing I note from the idea of a contest is that one party benefits from all the work of the competition entrants but only one entrant benefits when they 'win'.
Perhaps short-sighted employers will use this type of model soon; "This month 'George' showed outstanding conversions so his family will eat (for a month)"
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Re: Can't plan for the future (Score:3)
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For equivalent positions some Federal Gov jobs pay less than civilian - think Dept of Interior and similar cabinet jobs. However, the vast majority of Federal Gov jobs pay quite well compared to private sector. I spent time working in private sector non-Gov related jobs and over 20 years as DoD civil service. I didn't see many civil service people trying to get industry jobs (unless they retired and came back as Gov contractor), but I did see lots of industry folks trying to get on-boarded to Gov. In my min
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Well, uh, I work for the Navy at NSWCDD for the government and here, we have lots of people that come onboard, get their clearance, then leave for private industry... Maybe it is because our 'pay for performance' system means that you will never get more than a 6% raise in one year, while I, in my prior life used to average about 20% per year... That's impossible here. Here at this location we don't have the GS system, so we don't get any kind of guaranteed raises like people in the GS system. Coincid
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Where I worked the last 15+ years about 1/3 the jobs are regular GS scale and 2/3 are in pay bands. Pay bands are much friendlier to the workers. In fact, so many engineers (I am/was one) maxed out on top pay band (GS-15 step 10 equivalent pay) that they are having to redo the way it is run.
Yeah, a person could earn more as a support contractor but most don't go that route until they retire because Gov protections and benefits are too good. Based on what I've seen Federal workers are well compensated for w
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and as we all know no industry does this sort of thing except to justify paying workers less while demanding more from them..
No, not so much as using it as a weeding out process. Any sales manager can tell you that a handful of guys are always his best performers, while the majority of the staff comes and goes with small numbers. But the top sellers also by far make the most bank, and lots of it. That's a Darwinist way to run a business, hard and brutal, but it also produces the best people in any given sector and weeds out the non-hackers who can't handle the pressure. This used to be how things were done as a matter of course a
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I don't think many companies understand what the 'non superstar' employees provide - often it is a consistent regular decent quality of work that may not be excellent or super-speedy, but over time, and lots of employees, adds up to a huge amount of value. And that value needs to be reflected in the basic salary.
If you get a 10x performer, and they truly aren't a 10x * 1/10th of the time performer with crippling ADHD, then you promote them WITHIN THE SAME ROLE. Don't turn superstar programmers into paperwor
Re:Can't plan for the future (Score:4, Informative)
If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.
My personal experience with compensation plans goes like this: 90/10 (or 85/15 in 1 case) split. 90 percent is predictable salary. 10 percent is "at risk", paid out if you meet your goals (established by you & your manager at the start of the calendar year and possibly with a reasonable Corporate-level goal added). Any bonus payouts beyond that 10 percent were either defined with a known set of "extraordinary goals" (125 percent of sales target or whatever), OR, based solely on a high-level management decision (a "discretionary payout"). I worked as hard as the next hard worker and I never lost out on salary.
FYI - I can live well within my means on 90 percent salary if I wanted to slack off every day at work and not meet any of my goals towards my 10 percent. You had to be a real "lam3r", seriously, to slack off and not get your 10 percent.
But I guarantee you, next annual employee appraisal meeting there will be questions from my manager about why I slacked off when Jack & Jill met their performance goals and got their 10 (or whatever) percent.
Quote from Starship Troopers: "Everybody fights. No one quits. You quit and I'll shoot you myself."
And "slack performance" in some companies can put your name on an undocumented "watch list" in HR where your performance will be carefully & continuously evaluated for reasons to release you from employment.
Just sayin'
Now I hear that "account executives" had a steeper split (60/40, 50/50, 40/60, whatever), but they could also work against "draw", a payout. If your accounts produced the sales targeted numbers ("you made your numbers"), any payout had your "draw" amounts subtracted from it, and the remainder went to the employee. Some account executives had sales that took multiple quarters to complete due to customer-requested product delivery dates extending across multiple quarters. That's "the game" that account executives have to play, like gambling in Las Vegas. And if you did not "make your numbers" you owed the company for your "draw".
But Sales was not for me.
Re:Can't plan for the future (Score:5, Interesting)
From my past experience, we paid good bonuses to our best staff... and "something" to everyone else in normal years. In great years everyone got more and it took some pressure off raises. In bad years, bonuses were lower, but we tried to be more strategic with raises to make sure total compensation was inline. That dance might sound supportive of the parent's case, but what it ends up doing is making employment much more variable. Labor was about 35% of our costs, and we had a net margin of around 15% before bonuses. Having flexibility with 3-4% of our expenses meant we didn't have to hire and fire based on project flow, which helps everyone with stability.
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If your department at the company isn't profitable and expenses don't scale with income, some of you are getting fired or passed up for raises anyway. So might as well get bonuses based on performance.
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Right, just live with it. Remember, companies learn from this sort of behavior.
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Loyalty died 60 years ago. These days, the name of the game in negotiation is attack.
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If I can't plan for the future with a determined salary then you don't deserve my skill set. .
I take it you've never worked in sales or on commission.
Re:Can't plan for the future (Score:5, Insightful)
If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.
Counterpoint: if you can't reliably earn enough off your own skillset in a bonus/commission model, you don't deserve a salary that is piggybacking off ME.
Counter-counterpont: if you don't know already know whether I'm pulling my weight, then you're not managing your business well.
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Counter-counterpont: if you don't know already know whether I'm pulling my weight ...
What about a new employee just hired?
A fixed salary means they may be overpaid ... or quit because they're underpaid.
Bonus-based compensation means they'll be paid what they earn.
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Or they'll be paid what management wants to pay them and if necessary a productivity issue will materialize from the aether to "justify" it.
Comment removed (Score:5, Informative)
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Don't become a member of a star team within any business with a stack rank.
Become a member of a lame team you can easily top. And by lame I don't mean poor, I just mean there are plenty of people in any company in it for a salary, who'll sail through not wanting promotion, enough for the beers in the bar and the girls in the club, that kind of thing, so you can easily edge them in performance for little effort.
Re:Can't plan for the future (Score:5, Insightful)
How about the opposite way around, The employee will take a huge salary and give the company a bonus if they provide them with a good working environment. Of course what is a good environment is up to the employee.
Maybe we can extend this to doctors, I will pay you a small base amount for the surgery if I think you did a good job then I will pay you more. Next time you get an operation see how that idea flies.
All I see is this is working for tips for everyone. OK not for everyone, everyone but the rich.
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That's assuming the commission is actually figured correctly. I wouldn't trust HR to do math on a wet paper bag.
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Management makes a bone headed decision that means no matter how hard I work, profits fall below the bonus target and I don't get paid what I earn not matter how hard I work.
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Yeah, bonus targets are always ridiculous, you can always see how the market is in advance, and sometimes not shrinking in a piss-poor market is a great target.
OTOH sometimes you meet the target and they have to pay out - but then they have the maximum pot limit....
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New employees are always overpaid for their value to the company. It can take years in a big company to know the people who get things done, the structure, how things work - yet most businesses don't consider that at all in salaries for long term employees who will outperform newbies (on similar or higher salaries to boot!).
Remember, once you have personal life responsibilities (mortgage, family, children, debts) changing job becomes a lot riskier, and companies know this.
Most employees' work does not resul
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If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.
Counterpoint: if you can't reliably earn enough off your own skillset in a bonus/commission model, you don't deserve a salary that is piggybacking off ME.
Counter-counterpont: if you don't know already know whether I'm pulling my weight, then you're not managing your business well.
Counter-counter-counterpoint: People tend to be motivated when their work is rewarded. A bonus based directly on your performance is a much more direct reward than a salary that largely stays the same unless you go through a long sustained period of unusually strong (or poor) performance.
Making a bonus substantial and fair is tricky, but I think it's reasonable to pay enough to cover bills and then have the bonus form a jump on top of that. You really should be budgeting to spend less than you earn each mon
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If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.
Counterpoint: if you can't reliably earn enough off your own skillset in a bonus/commission model, you don't deserve a salary that is piggybacking off ME.
Counter-counterpont: if you don't know already know whether I'm pulling my weight, then you're not managing your business well.
Counter-counter-counterpoint: People tend to be motivated when their work is rewarded. A bonus based directly on your performance is a much more direct reward than a salary that largely stays the same unless you go through a long sustained period of unusually strong (or poor) performance.
Making a bonus substantial and fair is tricky, but I think it's reasonable to pay enough to cover bills and then have the bonus form a jump on top of that. You really should be budgeting to spend less than you earn each month regardless.
Counter-counter-counter-counterpoint: bonuses are still possible, without tying it to "Base" salary.
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If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.
Counterpoint: if you can't reliably earn enough off your own skillset in a bonus/commission model, you don't deserve a salary that is piggybacking off ME.
Counter-counterpont: if you don't know already know whether I'm pulling my weight, then you're not managing your business well.
Counter-counter-counterpoint: People tend to be motivated when their work is rewarded. A bonus based directly on your performance is a much more direct reward than a salary that largely stays the same unless you go through a long sustained period of unusually strong (or poor) performance.
Making a bonus substantial and fair is tricky, but I think it's reasonable to pay enough to cover bills and then have the bonus form a jump on top of that. You really should be budgeting to spend less than you earn each month regardless.
Counter-counter-counter-counterpoint: bonuses are still possible, without tying it to "Base" salary.
Counter**5-point: For a bonus to be an effective motivator the employee needs some agency over it. If the employee knows they'll receive a bonus of some level regardless then there's an expectation (true or not) that every action they take directly affects that bonus. If the bonus might not happen at all the employee feels like their efforts could be wasted. By making the bonus more predictable (but variable in value) the employee feels a stronger connection between their efforts and compensation, and incre
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Yes, a bonus should be made up of, for example:
33% Business Performance (Target being met, IMO target needs to be sensible and reflect the market)
33% Business Unit Performance (against business unit (for us here, IT) goals, budget, etc)
33% Personal Performance (NOT stack ranked, but measured against personal goals)
Some might use 50/25/25 or even 50/35/15 because personal performance is often tied to the people around them anyway. If you're blocked all year on other teams, then why should you be penalised?
Re:Can't plan for the future (Score:5, Informative)
Counter-counterpoint B: Regardless of how reliably I actually earn bonuses, my mortgage provider isn't going to count them as trustworthy income...
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Hell yeah, you must be one of those "atom sized black hole" CEOs I just read about.
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Counter-Counter-Point: If your employer says that you didn't meet expectations and therefore you don't get a bonus it doesn't matter what you actually DID because they have all the power at that point. Sure you can quit right then and there and look for a new job, but that doesn't pay the mortgage due today.
Re:Can't plan for the future (Score:5, Interesting)
Yeah, I've worked commission jobs. They're usually slanted to make sure the employee barely keeps even.
Worse, incentive based pay encourages people to cut corners, take unnecessary risks, and expose the company to liability through unscrupulous behavior.
Real estate and finance are two industries that incentivize their business to a strong degree-- and both are considered unreliably, untrustworthy, and borderline (if not actually) criminal.
I would not make long-term investments in any company that bases it's pay structure on incentives. They will collapse, it's only a matter of when.
Oh, yeah, HUGE shi...ft. (Score:5, Insightful)
Re:Oh, yeah, HUGE shi...ft. (Score:5, Interesting)
Even when it does happen, a $500 bonus only costs the company once where a $500 raise costs the company $500 every year.
A $500 bonus can be given every year and it feels like they're getting something where if they give a $500 raise, they'll be expected
to give a raise the next year as well.
Look for more Unionization (Score:5, Insightful)
This is going to push several workers into unionization because while this might start out where employees are pushed to be more productive, this will become easily exploited with moving targets that become unrealistic.
On top of this, if you deploy such a measure poorly, you could easily create divisiveness in the workplace where employees sabotage each other to prevent one team or another from getting a bonus while subverting others to get their own bonus.
This is something we see in libertarian organizations that sounds good as an ideal but doesn't pan out and more than likely implodes.
Re:Look for more Unionization (Score:4, Interesting)
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>>this will become easily exploited with moving targets
Every time. The thermostat always gets cranked, should normalcy dare approach. See also:
"When a measure becomes a target, it ceases to be a good measure." --Goodhart's Law [wikipedia.org]
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This is something we see in libertarian organizations that sounds good as an ideal but doesn't pan out and more than likely implodes.
I call bullshit. Citation needed.
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For example, the Quota Systems under Slavery and their resemblance to modern "incentive plans"
The quota system was a method of organizing labor on plantations where enslaved people were given a daily quota of work to complete. The system was used to increase the amount of cotton produced by enslaved people, which fueled the growth of U.S. capitalism.
Here are some details about the quota system:
Daily quotas: Enslaved people were given a daily quota of cotton to pick.
Punishment: Enslaved people who didn't mee
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Expect it to be slowly reduced (Score:2)
Re:Expect it to be slowly reduced (Score:4, Insightful)
That is probably the plan here. Good bonus payments mean that either a) the system is fair (it will not be) or b) you are C-level (most people are not, obviously)
My take is that this is just a camouflaged pay reduction for anybody doing actual work.
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Re:Expect it to be slowly reduced (Score:4, Insightful)
Our corporatist oligarchy is, has been, and will continue to squeeze the plebs for every bit of wealth stopping only just short of actual armed revolt, the likelyhood of which they're working to reduce by other means. coughcoughguncontrollcough
There's not going to be an armed revolt against the oligarchy so long as the armed folks are all convinced their "enemy" consists of the other plebs who happen to have a different opinion on various social issues. The distraction tactic works.
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That can work for a year or maybe two... after that people catch on and stand up for themselves. Going from a 30% bonus down to 10% would get most people to quit in a flash. Going from 5% to 3% is not quite as much of an impact.
Who evaluates the performance metrics? (Score:1)
When the boss is both the evaluator of the performance metrics and the generator of those metrics, expect end-of-quarter conflict.
Oh, and have fun with the un-sackable team member.
Been there done that (Score:5, Insightful)
Incentives Aligned! (Score:5, Interesting)
If there's even a bit of wiggle room in the metrics used to judge 'performance' the whole exercise basically becomes a salary negotiation but with extra steps, a veneer of objectivity, and a lowball default: when you can both assign someone a performance number and are on the hook for paying them based on their performance number your incentive is to just rank everyone as "you should be thanking me for not firing you" unless you are really afraid that they'll walk: which isn't really "bonus-based"; it's just how salaries work, except that now you are going through an insulting charade every time. Hooray.
If the bonuses are based on company performance rather than individual performance there's less room for just gaming the metrics; but the relative helplessness of any individual employee in determining the success or failure of a company of any nontrivial size makes those profoundly dispiriting unless they are actually pure 'bonus' on top of an acceptable salary: how is it going to encourage performance if you can do your job well or badly and your bonus is basically a coin toss based on broader economic conditions or whether consumers want red widgets but you make blue widgets or whether blue widgets are super popular this year?
Had a job like that.... (Score:4, Interesting)
The incentive was monetary targets.... The problem was that I valued delivering customer experience and relationships over taking them for every dollar I could. Probably why I now work in a large government funded organisation these days. In that previous job, clients would rather wait for me to become available than to have other techs come instead, and if I said they needed xyz they'd write a cheque there and then because of the trust built.
However, management only saw dollars generated and so thought I was underperfoming.
I think I only ever hit the target set for me once in the time I worked there. However, I had the happiest and most loyal customers. Go figure.
Re:Had a job like that.... (Score:5, Insightful)
Good idea in theory (Score:4, Interesting)
As with most things, this is good in theory and likely terrible in practice. This fixes a lot of the issues of people doing just enough to get by and counting on the people who are motivated to keep things going and actually getting things done. The issue is usually the performance metrics are built around the absolutely highest performers, meaning those who can't spend 60 hours a week working end up making less. Those people who come in and work hard but aren't willing to devote their life to the job end up getting screwed as they don't make much more than the people who just skate by and way less than the people who have no life but the job. It is good for the company since most people get a pay cut.
Another MBA-screw job (Score:2)
Don't fall for this (Score:5, Informative)
I got forcibly switched from a wages + overtime model to a salary + performance bonus model around 2008. It's a scam. Your metrics will always be based on something you don't have direct control over, and they will always be "stretch goals," which is code for "almost impossible to meet." The only person who received performance bonuses there was the HR manager.
I left there two years later and went back to a wages + overtime model where 5 hours of overtime per week is expected during normal times (45 hours total). It's much better. When things are busy I don't mind working extra overtime and getting paid for it, and when things are slow the company can cut overtime to reduce costs without resorting immediately to layoffs. The only time the company had any layoffs in the last 15 years was for about 1 month at the beginning of COVID, and then everyone was brought back.
Don't forget payment delays (Score:3)
Misnomer (Score:1)
Quite often the bonus-based portion of an employees compensation is only slightly determined by the individual's performance. It is mostly determined by factors largely beyond the employee's control - like performance of the company as a whole.
In this situation, the bonus-based portion is more of a tool by which the company can quickly make adjustments on cashflow - much more difficult to do with the fixed portion of the salary. But it does have to be advertised as part of a "reward for performance" culture
Crisis in business - quiet quitting, etc. (Score:4, Interesting)
The truth is simple - businesses have found themselves in a crisis. The pandemic forced a lot of people to reconsider their working lives - far too many people were living to work, and working to live.
That lead to things like quiet quitting and other things where bosses used to dangle incentives to work harder - promotions, pay increases, and other things. Of course, that stuff never happens - things like "you want a pay increase? you have to change jobs" and promotions going to outside people rather than from within.
Sure, it fooled people for a while - Jack Welsh and his admirers managed to do it since the mid-80s and gotten big fat and rich off the gullible boomers and Gen X. But the pandemic refocused the Millennials and others into realizing that businesses don't care about them, and to work harder for trinkets is stupid. Hence the whole "quiet quitting" movement where everyone is going to work their wage.
And thus business lost basically all leverage in getting their workers to do more for less - workers aren't going to be fooled by non-existent promotions, meagre pay increases or other things to work harder. It took a number of years for the lack of loyalty to hit back at businesses - gone are the days where businesses could expect loyalty from workers but give none in return. And now that both sides are no longer loyal, business lost their leverage.
It's a crisis for business - you're going to get the employees you pay for, and they're going to jump ship when a better offer comes along. You can't keep them with promises of promotions or pay raises anymore.
They're trying bonuses because it's the last thing they have in their bag of tricks. "If the company does well, you'll do well". Hoping that no one gets wise to shifting goal posts to ensure you don't pay out, or to encourage 7 people to do the work of 10. That and seeing the boss take the lion's share of the bonus that you worked your ass off for.
Chances are they might get a few people to work themselves to death (remember that lady that died at her desk and no one found her for 4 days?), but then people will realize the fruitlessness of it all and not even try. The goalposts are always going to be "We're nearly there! Just a bit more!" Meanwhile everyone else just does their wage - why even try.
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Jack Welsh and his admirers managed to do it since the mid-80s and gotten big fat and rich off the gullible boomers and Gen X.
Jack Welch. The titan of industry. One of the most admired men in all of business. At the helm of a global company with revenues far above every single nation state except the USA and California economies.
His leadership was so awesome, that GE, aka General Electric, is no longer a household name. The entire company has been cannibalized and broken up into smaller units; although, even in its fall, it is still larger than most companies.
What did Jack Welch's ideas do other than ruin a perfectly good company
\o/ (Score:1)
Rory Sutherland argues (paraphrasing somewhat) quite convincingly: ...that individual performance metrics harm the company overall in the long term - drawing a parallel with the behaviour of bees, a proportion of whom ignore the figure-eight-dance of other bees. Conventional wisdom might be that because these bees are communicating the location of sources of nectar, 100% observance of suggestions to 'go this way' are to the collective advantage.
" https://youtu.be/aRxq_E0SWzs [youtu.be]
He postulates that the 20
History and science (Score:4, Interesting)
Like tips, bonuses are a way of downloading risk from a company to the employees. Studies have shown that beyond a certain, surprisingly low, threshold, financial incentives lose their power to motivate. At some point employees come to depend on them and they're effectively salary that an employer can pull out from under you at any time.
If you want productivity, set clear expectations, hire well, pay appropriately. Anything less and you may get a temporary boost but in the long run you're headed downhill with dropping moral and bleeding your best producers.
Plain old capitalism is being phased out ? (Score:1)
The basic capitalistic premise is that the capitalist who owns the production means hires the worker's time hence a "fixed" pay regardless how much profit the worker generates.
Is the pay becomes function of the productivity the "employee" becomes a business partner and the "employer" should no longer have a say in how the time is spent.
This can go even further: the worker should be able to re-negotiate his tariffs at any time, after all if his pay is based on performance rather than assiduity, then he might
The goal is to spend less (Score:4, Insightful)
"Employers argue this model boosts productivity, while some workers report earning less than expected"
The reason employers do this is to save money so of course earnings will be less than expected.
Assume no bonus in every salary negotiation (Score:4, Informative)
If I'm interviewing for a job, and there's a bonus potential, I don't even think about the bonus when deciding whether to accept the offer. The only part I look at is the salary part. The bonus is just gravy, if it happens. The thing about bonuses, is that they come and go, and companies can't resist constantly tweaking them to make them smaller. So if the fixed salary part is sufficient to meet my expectations, I'll consider the job. If I *must* have some or all of the bonus to make it work, the answer is no.
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As I've never had a bonus plan that didn't consistently pay out at or above 80% of potential (and sometimes even above 100%), I value the bonus component of the offer more than you do. However, I generally negotiate first for more stock options if the company is a startup, then more salary, then more bonus. Often a hiring manager has more flexibility in one of these than the others.
During the negotiation process I do of course inquire as to the history of bonuses - esp. the percentage of payout on the "corp
Re: (Score:2)
If that strategy works for you, great. Your experience doesn't seem to be representative, however. For most companies, if bonuses exist at all, they are fleeting and volatile. At one company, I got a $20K bonus one year, and then nothing after that. Hard times, you know. Most of my other employers that offered some kind of bonus, it was on the order of a few hundred dollars or a couple of thousand.
Lessons never learded (Score:2)
Bonuses are completely discretionary on the part of the business and as others have pointed out, can be easily gamed.
Just wondering if the captains of industry ever bothered to read up the lessons from the French Revolution.
I once worked for a telecom (Score:3, Informative)
...that rhymes with Slime Forner. Certain positions were paid bonuses based on performance stats, but the scoring rules grew ever trickier with more complex products/services, and the software couldn't keep up. For example, if there were a shortage of parts, they lost the "completed on time" bonus, but it wasn't their fault. The supervisor had to confirm there was a part shortage to reverse the time penalty, and sometimes they didn't bother to log it, or logged it differently for different employees.
And the org didn't want to pay for decent IT, so many wasted a lot of time haggling with their immediate supervisor and IT to have manual corrections to the algorithms' imperfect scoring. Many of the workers had entry-level wages, so the dimes mattered.
Perhaps it can be done well, but an org has to be willing fully support it rather that let it rot into an ad-hoc mess. It might turn out costlier to manage the Score-A-Tron than simply pay flat wages.
It was intended to motivate by making work feel like a video game: the more Pokemon you install or fix, the more points. But it can grow as complex as a video game, as modelling work activities realistically won't come cheap. And that includes manager time to deal with the administrative side for things like approvals and reconciling alleged discrepancies.
I also got bonuses, but it was more of an end-of-the-year-thank-you rather than stat driven.
how much bonus did boeing VP's get for cutting cos (Score:2)
how much bonus did boeing VP's get for cutting costs?
A fair offer... (Score:2)
I don't think this is the best mode to motivate either of us, though.
TIP Jar (Score:2)
Would you like to leave a tip? 20%=$x.yy 25%=z.xx
Lots of Bitter People Commenting (Score:2)
I guess I've been fortunate. I consider my own salary a pretty generous deal considering the work I do and my tenure with the company, and the company has a profit sharing bonus plan that every employee participates in. That yielded me over 20% of my base salary this past fiscal year, because the company did very well. But then, I work in a tech development area unrelated to IT, so there's that.
But speaking of bitter -- I used to work for a major defense contractor. The CEO there makes over three times what
Basically "tipped employees"? (Score:2)
This seems a lot like how eateries can pay people far below the minimum wage, assuming that tips will make up for it. Sorry, an income is so random that it can't be trusted, I'll rather go to a place that has something more steady. I'm not a salesperson, and often, there are no good metrics for IT, because even the best IT department can hit show-stopping issues that nobody has seen before. For example, the SAN having all its LUNs go read-only. The fix? Not a reboot, not a shutdown, but a complete powe
Deserves misery (Score:2)
This isn't the same as working for tips, because the customer can't pay you directly. Now, your boss decides if he likes you today and pays based on that subjective result.
There's an obvious question here: Who decides how those metrics are calculated, and what they're worth? The employee has no power in this deal and anyone who doesn't walk-out the door immediately, deserves misery.
Nothing new (Score:2)
Over 20 years ago the company I worked for (now part of a much bigger company) did this, and a simple spreadsheet made it clear that I'd benefit for about 3 years, but because the base raises were slashed, I'd be behind after 6 years (As it is, the merger laid me off after 4).
And the company can basically avoid paying bonuses - the goalposts move, and are often based on corporate metrics that are opaque, and way out of your control. So you can with your butt off, exceed every target, and never see a bonus.
Re: (Score:2)
Weird dicotomy (Score:1)
I have no idea whether this sort of pay system is better or not for workers or for companies. I imagine it will work out well for some people and companies and be a mess for other people or companies.
However, I do notice some strange comments here. When the topic is work from home it seems 90+% of commenters are in favor of it, with most saying how much more productive they are and how quickly they get work done. When it comes to possibly being paid for performance then it terrible and bad this is because p
Tax evasion (Score:1)
And it s all a giant tax evasion ploy.
Re: (Score:2)
As in : "Oh ? You got a bonus ? It probably wasn't expected then and you don't need it as much as Washington DC critters."
Risk Transfer is the Object (Score:2)
If a company performs badly for any reason and this sort of system is in place then the employees are the ones who are punished, not the owners or shareholders. It's similar ro a variable-rate mortgage: These are set so that the bank always gets a profit no matter what the overall market does. If the market takes a turn that is unfavorable for the bank, the mortgage holders must pay more. In merit-bonus-only companies, the employees get less when the company does badly so that the bottom line can be main
Bad lingo (Score:2)
Good idea, just like for the CEOs! (Score:2)
Great idea and this works amazingly well for the CEOs who clearly get not a single cent if the company performance sucks.
Right?
RIGHT???
no to productivity (Score:2)
Employers argue this model boosts productivity
No, it doesn't, and they know it. Close to a hundred studies have been conducted since the 50s on this topic and they all show the same thing:
Bonus systems work for purely manual work. Factory workers, garbage men, the like. Maybe bureaucrats.
As soon as the job includes thinking, bonus systems reduce productivity. (most believe that a reward hampers creativity and narrows the focus, and people working under a bonus system essentially grind for the rewards instead of doing their job as best as possible)
Produ
(Pssst... it's a paycut) (Score:2)