Comments on: Bonus or No Bonus?

By: Mike Myatt

Mike Myatt — Mon, 26 Dec 2011 16:40:00 +0000

I’m always a believer in giving someone a chance to deliver on their commitment before I remind them of any perceived shortcoming. Therefore, I would suggest letting the year come to an end, and see what does or does not transpire before taking any action.

If the year passes on no bonus comes, then you have a decision to make. If you decide to bring it up, I would suggest doing it casually but professionally, courteously, and very respectfully. There’s never anything wrong with attempting to clarify misalignment and/or communication gaps so long as said clarifications are handled adroitly.

Whatever the outcome, I suspect you’ll learn something valuable. Keep in mind however, that not all people like to be reminded of their shortcomings – they usually don’t see them as such:)

By: Mike Myatt

Mike Myatt — Mon, 26 Dec 2011 16:33:00 +0000

Properly structured, the idea of project based incentives is a sound idea. I’m not so sure I agree with the absolute nature of your other observations. My take would be less rigid – year end bonuses don’t always work, and they can backfire without proper construction and implementation. That said, they do sometimes work quite nicely.

By: Anonymous1234

Anonymous1234 — Mon, 26 Dec 2011 04:55:00 +0000

Hello –

Thank you so much for writing this article! When I had my review in the middle of this year, one of my bosses mentioned that I was doing a great job and that while the company was not giving out raises, they were giving out end of year bonuses. Now that we are at the end of the year, there has not yet been any mention of bonuses. Since it’s called a “bonus”, would it be incorrect of me to bring this up and remind them of what we discussed a couple months ago?

Thank you!

By: Maslow hierarchy

Maslow hierarchy — Tue, 20 Dec 2011 02:48:00 +0000

2 things: first of all, bonuses at the end of the year do NOT work, they don’t really create any incentives. At the same time, because employees are already used to the bonuses, cancelling them would decrease employee morale. So my advice, when you design bonus structure, give bonuses at the end of projects or when people actually create value. End of the year bonus does not create any value.

By: Mike Myatt

Mike Myatt — Thu, 15 Dec 2011 03:06:00 +0000

Thanks for your comment and question. Employee satisfaction can be measured in a number of different ways including: Net Promoter Score, length of service, attendance, contribution, collaboration, customer satisfaction, etc. But if I were going to design a bonus around employee satisfaction I would poll the employees and ask them what they feel are the best metrics to use within your environment. I would then use a balanced scorecard approach weighted upon the most meaningful key metrics. I hope this helps.

By: Mike Myatt

Mike Myatt — Thu, 15 Dec 2011 02:52:00 +0000

Thanks for sharing Jeremy.

By: Jeremy

Jeremy — Wed, 14 Dec 2011 23:54:00 +0000

We are a small company (25 staff) and have what we call a ‘discretionary
bonus plan’, meaning it’s at the MD’s discretion what and if they get it. It’s probably a result of not currently having
the capacity to define a more complex scheme. It’s basically a loose tie in
between company performance and individual contribution to that performance. Any
manager or MD should be fairly in touch with how much and which people are contributing
to the company so should be able to have a gut feel for who should get bonus
and how much. Some companies have a culture of a 13th pay cheque – we
take the view that is extreme as a standard for all staff so our bonus ranges
from 10% to 30% of their currently monthly salary depending on how much they have
contributed. It is also important to be consistent year to year if the company
is doing well, and to raise it slightly each year for people getting them so they
feel a sense of progress and improvement. For special employees it’s also nice
to let them know in a separate letter or meeting to appreciate and acknowledge their
contribution.

By: Annonymous

Annonymous — Wed, 14 Dec 2011 22:08:00 +0000

We just gave our holiday bonus. We just decided a total we could afford and all staff got one. Over the past 3 years we could not give raises. Finely in 2012 looks like we will be able to give raises but we have decided to change the bonus system. Our business is dependent on customer and staff satisfaction. Every employee can impact both or one of these measures. We will be funding a bonus system on profit margin. If we meet P/M goal we will then payout a bonus based on meeting the following measures repeat business and new business acquisition. We are working on a measure for staff satisfaction…Any ideas?

By: Mike Myatt

Mike Myatt — Wed, 14 Dec 2011 18:36:00 +0000

I don’t dispute for a second that intrinsic motivators are superior to financial incentives. Financial incentives simply cannot fill a void created by a lack of values. That said, financial incentives (properly constructed) can help add to align those around a set of performance metrics that support the overarching vision.

By: Mike Myatt

Mike Myatt — Wed, 14 Dec 2011 18:31:00 +0000

Brilliant – “That’s why they call it a BONUS.” Thanks for sharing Chris.