Which of the following companies would you prefer to work for:
Company A - Here everyone over a certain pay level receives a bonus from a shared bonus pool. It’s a formulaic bonus based upon the results of the company, division, etc. thay you work in. Everyone in your group receives the same % bonus regardless of their individual contribution. So the guy in the office or on the line next to you is going to get the same % as you even if you work harder than he does. It doesn’t matter if he creates tons of compliance risk for the company because he sexually harrassed the new girl earlier this year. He’s still an employee at the end of the year so he also get’s his %. And so do you.
Company B - Here all employees are eligible to receive a bonus. But bonuses are based upon individual contribution. Supervisors get feedback from peers, subordinates, etc on the individuals performance and agreed upon measures are used to determine successes and contributions, including contribution to the compliance culture at the organization. The overall bonus pool is dependent upon the profitability of the company, division etc., but how it is shared is dependent upon your individual performance. So if you are a mediocre performer you may get a small bonus, but if you are an outstanding performer you will get significantly more, while substandard performers get nothing.
It depends on the company atmosphere. If there are petty little cliques and asinine workplace politics at play, company B could be a nightmare even if you work your ass off.
Not necessarily, I’ve seen cases where people work very hard, and the company was HAPPY to give them a bigger or more difficult workload with none of the increased pay or benefits.
Of course, there’s also plenty of cases where people work hard and become project lead/manager/department head/whatever.
Overall I’d say that in concept B is better, but depending on the people running the show, or even the other workers on the team, A may be better in some cases.
I work at company B, and I’m happy with it. The one year I didn’t get a bonus, it was my own damn fault for slacking. Our bonuses aren’t very big (around 500-700 annually for the average employee in my dept), but the top-performers generally pull in excess of 1k. It’s a decent motivator.
Let me argue for the position that you want lock step bonuses.
Associates at law firms are paid bonuses that can be a significant percentage of base pay and the method that worked the worst was purely subjective bonuses. It made everyone focus on office politics rather than productivity. It undermined esprit the corps and led to a poisonous environment, it was also an HR nightmare.
Having formulaic bonuses caused some resentment but it never took more than a year or two before the underperformer lost their job or moved on.
The best method I have seen was about 80% formulaic and 20% subjective. The subjective portion was based on vertical and horizontal reviews and was a very effective signalling device. So much so that in a reasoanbly good economy we rarely had to fire anyone, they just ssaw the writing on the wall and left. Getting the fulll bonus was a good sign that you were on track for partnership.
