[Closed] Why have bonuses?

I haven't read all of the posts but here's an example of an advantage of bonuses:
Say the company that I works for has a good year with a 10% increase in profits but at the same time the economy of Europe it's major export market is looking shaky so the outlook for the following years looks bad so instead of giving us all above inflation pay rises which may be unsustainable next year if sales drop off a cliff so instead they pay a bonus and just give an inflation pay rise.
Of course bonuses of a couple of £1k that most people may get are not the same as the bankers bonus that the media are obsessed with.
Also I doubt that many people who get paid a bonus are paid any overtime or get time off in lieu.

I have a bonus element of my salary and it is highly motivating.

Me too. Given that my employer has removed the link between salary increase and annual performance, bonus is all that remains to offer any incentive to work harder or give more.

just give an inflation pay rise.

Just? 🙄

bonuses give the incentive to set a goal with a material, measurable outcome. I ensure that I have met all mine as the consequences of not meeting then will mean a 0% pay rise, no bonus and ultimately performance management out of the company. Meeting them will give me anywhere between 10% and 25% extra pay.

I believe there is a place for this at all levels in a company if applied well. At the level where you are a customer service rep (the lowest grade in the company), you get 0-10% bonus, 5% is on target for meeting your 'rate per hour' and 'quality' target. Sales commission is above and beyond this and measured and paid separately. Can't see much wrong with this system myself

Personally, I try to do as good a job as possible because that's what I get paid for in the first place. 🙂

Rusty Spanner - Member

Personally, I try to do as good a job as possible because that's what I get paid for in the first place.

Yup - me too.

Personally, I try to do as good a job as I possibly can because that's what I get paid for in the first place.

[img] [/img]

😀

😀

ernie_lynch - Member

CaptainFlashheart - Member

Nope. Sat on their arses as per.

Listen mate, you're the only one that I know on here who's embarrassed to say what they do for a living, that's if you do anything at all.

So either stop slagging people off or tell us what you do, other than sit on your fat arse all day, so that you can be judged too.

Seems only fair - no ?

😆

Thing is earnie, he's very easy to catch out - almost too easy.

Embarrassed? Nah, just prefer not to talk about it online, thanks!

(Work for a large corporation, running a business unit related to risk 🙂 )

You're an insurance salesman?

Show us some of your riding pics 😀

He can't be that busy considering he spends a huge amount of time on here. Even on nice days when he could be out..... riding....?

Don't have any online, Chunky. Sorry. 🙂

I think we could all have predicted that answer.... 8)

Scan some pics? 😆

Which Rugby team/nation you supporting this year?

Personally, I try to do as good a job as I possibly can because that's what I get paid for in the first place.

Which is fine, and perfectly justifiable - but it would also be reasonable to include a bonus element to inspire you to do that little bit more...

Take the much-maligned tube drivers, for example: a justifiable bonus (IMO) would be linked to company efficiency savings, monthly reliability figures etc. Turn up on time, do the job, head home - OK. But actively look for possible improvements, point out possible problems before they occur - it's not necessarily in their job description, but is definitely behaviour that it is in everyone's interest to promote. You could apply similar measures to health workers or teachers, for example: yearly improvements on hospital infection rates, exam pass rates (or whatever) mean a bonus.

What I don't think could be justified would be a bonus simply for doing their job, particularly for workers that get paid overtime etc. for working out of hours.

Personally, I try to do as good a job as I possibly can because that's what I get paid for in the first place.

Which is fine, and perfectly justifiable - but it would also be reasonable to include a bonus element to inspire you to do that little bit more...

Post edited on reflection.

Can someone tell me, aside from the jealousy factor, (which CFH seems to have unwittingly instigated above)
- what difference does someone's employee incentive bonus make to anyone else?

I'm beginning to see a problem here.

Where?

110%? 😀

110%?

Depends what you've rated as 100%. Although I get the feeling we've had this argument before on STW...

Where banking differs from many other industries is the sheer number of potential employers that exist - there are over 300 banks registered to do business in London, this creates a level of competition for talent that has driven up wages in the same way that footballers wages have been driven up. And likewise only a few can achieve success and hence there are plenty of bankers being paid without producing income for their bank, in the same way there are highly paid footballers failing to win trophies.

Exactly. 😆
Clearly both TJ and Rusty Spanner believe that they are contributing 100%, a manager or customer might have a different pov.

- what difference does someone's employee incentive bonus make to anyone else?

Can make a huge difference - potentially very divisive. Some operations require high individual achievement, other operations benefit more from team cooperation and group achievement. In the latter, bonus culture is counter-productive, IMHO.

On reading all the points above, I can accept that there is good logic for having bonus schemes - I have been persuaded to see beyond by sceptical position!

However, of the bonus schemes that I have directly seen, the implemnetation has been shockingly poor - and I suspect that this is all too common...

eg.

1. Company makes a profit = bonus conditions triggered, bonus pot defined based on existing scheme rules

2. Board take 50% of pot, remaining 50% shared between business units that make a profit

3 BU director takes 50% of BU pot, remaining 50% allocated to each team that makes a profit.

4. At team level, manager takes 50% of whats left, and shares the remaining 50% i.e. bugger all, between the people who have actually generated the revenue for the business - and only if they have hit EVERY PM target.

Every employee who failed to hit every PM target - bonus flips over to the team / BU manager etc... SO managers set some very arbitary targets in appraisals, that are down to luck, or outside of your control. eg business requirements may dictate that in one year you are doing more business development to grow the business - so your team as a whole generates more revenue, but you individually hit your sales target, but at the expense of your individual revenue target - therefor HA HA no bonus 👿

Quite simply for my company we pay bonuses to reward hard work by measuring tangible outputs from each employee. It ensures that if an employee works his nuts off to meet certain criteria then he gets an additional reward compared to someone who does it. One of the big problems within large organisations (very prevelant within public sector) is that employees aren't motivated to work harder than their peers as they all get paid and rewarded the same. If the guy next to you is doing sweet nothing all day but gets paid the same as you thats not very motivating!

However, of the bonus schemes that I have directly seen, the implemnetation has been shockingly poor - and I suspect that this is all too common...

No argument here from me about that - but at the same time it's not a reason to automatically dismiss all bonus schemes as a divisive, unfair con.

[i]Some operations require high individual achievement, other operations benefit more from team cooperation and group achievement. In the latter, bonus culture is counter-productive[/i]

I disagree, but anyway, not what I meant so I'll rephrase:

- what difference does someone's employee incentive bonus make to anyone who doesn't work for the same company?

It ensures that if an employee works his nuts off to meet certain criteria then he gets an additional reward compared to someone who does it. One of the big problems within large organisations...[snip]

But conversely, if you work in a big organisation where everyone is working hard, it becomes very divisive to pay bonuses to some. Some "additional effort" is easier to recognise (and easier to "make visible").

Also the "outstanding achievement" of some is often highly dependent on the skill, expertise and dedication of others, who are not in as recognisable position...

- what difference does someone's employee incentive bonus make to anyone who doesn't work for the same company?

If it's public money that's paying for the bonus it's perfectly reasonable to have an opinion about it.

This is the most fallacious argument EVAR.

That may be because it is not supposed to be an argument but a commentary. The footballing analogy follows that many business units in banks did have unsustainable business models as too many people were chasing too small a market, it also should be stated that this is historic and after recent mass redundancies may well change. Although "rain makers" will continue to be perceived to exist and will continue to secure extraordinary compensation.

I disagree, but anyway, not what I meant so I'll rephrase:

- what difference does someone's employee incentive bonus make to anyone who doesn't work for the same company?

Really, there must be a better answer than that, surely? I just don't get it.

OK - I can see that. In the context of the current media frenzy - prob nothing to do with other people apart from the whole "politics of envy" type agenda...

Except that current media frenzy is about bonuses to people who are effectively paid out of public money.

Meanwhile the whole bonuses to bankers scheme was certainly one of the contributing factors behind us being in the mess we're in - so why should we have no interest in that?

Yeah, I get that - but they are an extreme case.

The rest, like me getting 3 grand (before tax) as a nice little Christmas present, affects nobody else..?

So, to keep good people in the company, keep it doing well in the market, it's a good thing yes?

How about that we take these people who need bonuses to motivate them and instead motivate them by sacking them for poor performance instead.

IE you do your best for the salary you are paid, if you don't do your best you get your cards.

simple, motivating, cheap- and more importantly how it works in most of the workforce

To me its an absolute disgrace to say you need to have a bonus dangled in front of you to be motivated to do your job properly 'cos that means without the bonus you do not do your job properly. Sack the laggards!

🙄 wish I'd left the filter on

Great idea TJ. And in the instance of the RBS guy, set his salary as his £1.2m plus the value of the bonus... same difference... You're still looking at it wrong IMO. The salary plus bonus is his real salary, he just has to perform (hopefully if the criteria are right) to get his full salary.

[b]To me[/b] its an absolute disgrace to say you need to have a bonus dangled in front of you to be motivated to do your job properly 'cos that means without the bonus you do not do your job properly. Sack the laggards!

There's actually a rather neat study that demonstrates that bonus's work for those employed in mind numbing repetitive tasks and are counter productive and reduce performance in more intellectually demanding roles.

That probably explains why the Banks are all bust.

[img] [/img]

So Don - you think its acceptable that people get their salery for not doing their best - and have to have more money waved in front of them to ensure they do their best.

Why not just sack them ( or threaten to) for underperforming to motivate them.

Apparently it works in public service.

Well, I'm glad I wasn't being thick and that bonuses are F-all to do with anyone else.

It's not more money, it's part of the overall salary. They get a pay cut (eg no bonus) if they don't perform.

TJ - have you ever met human beings before? Most respond better to a carrot than a stick - it is well known and understood. If you motivate with a negative action you get far less from people. You also come across as being very under appreciated in previous work posts - that you have gone above and beyond what was expected of you. Imagine there was some sort of recognition for your efforts - something useful rather than a certificate or kind words. Money, perhaps?

A large part of how bonuses work is the way in which people are managed and reported on. If, for example, you were given a set of goals or targets to achieve in the coming year (very common now) and that was based around your salary. A bonus might be awarded if you exceeded your targets - rewardng you for doing better. It really is that simple.

According to this video, and other research like it, bonuses work well for call-centre type jobs, and not for jobs requiring initiative. So bankers obviously need them.

http://www.ted.com/talks/dan_pink_on_motivation.html

Tootall - merely pointing out the inconsistencies and hypocrisy in this debate.

Take teachers - expected to give of their best all the time and threatened with the sack for not doing so. No bonus culture there. So in the case of teachers its the stick that motivates apparently but for bankers only the carrot does.

But these bankers apparently will not do of their best until they are offered large bonuses. I say sack then for shirking for not doing of their best

Apparently it works in public service.

The aim is to pay people who perform the best, the best and to move out those who don't perform adequately. In between the two sets, there are those who perform adequately - they may be doing their best but not have the aptitude of those who perform better or they may have the aptitude but not the drive. If they are doing a satisfactory job, there is no point in getting rid of them. Although, there are commercial organisations who sack their worst performing 10% every year, no matter what their results.

How about that we take these people who need bonuses to motivate them and instead motivate them by sacking them for poor performance instead.

There is a vast difference between doing an average job and poor performance. Bonus's are designed to reward those who go the extra step.

merely pointing out the inconsistencies and hypocrisy in this debate.

Really? So why are teachers expected to do of their BEST all the time merely under the threat of the sack ( and that threat being made more explicit) but bankers are expected to only do their best with the incentive of a bonus?

So why are teachers expected to do of their BEST all the time merely under the threat of the sack

I know a lot of teachers and don't agree at all with this statement.

all the time merely under the threat of the sack

Isn't it incredibly hard to sack a teacher ?

http://www.telegraph.co.uk/education/universityeducation/9011225/Poor-teachers-to-be-sacked-in-a-term-under-reforms.html

Typical public vs private bullshine. If teachers now say thay they are motivated by money, why not admit that you made a mistake and join the ratrace.
I always thought teachers taught so they could impart imformation and improve others.... Not feather their own nest.
I'm sick of listening to the petty jealousies from the likes of TJ on this subject. Grow some, get a different job or shut the F. up!!!
FFS!

What all the pies said, incredibly hard to sack a teacher and to prove average performance.

That makes my point - the threat of the sack is being used to motivate teachers. surely they should be being offered bonuses as according to you guys that is the only way to motivate staff?

It's not so much the fact that the money is given as a bonus, so much as the fact that many executives/bankers are paid an obscene amount of money.

If you happen to think that growing inequality is a bad thing (I do) then big bonuses are bad.

If you think that bonuses mean [url= http://www.guardian.co.uk/business/2011/mar/09/john-lewis-staff-share-200m-pound-bonuses ]this[/url] then I guess they aren't too bad.

That makes my point - the threat of the sack is being used to motivate teachers. surely they should be being offered bonuses as according to you guys that is the only way to motivate staff?

[url= http://www.telegraph.co.uk/education/educationnews/8949399/Michael-Gove-plans-elite-Master-Teacher-grade-to-lure-top-talent.html ]There are plans for there to be a carrot as well [/url]

Isn't this like the pensions debate those who haven't want the others brought down to their level instead of striving to get that themselves.
It's also like the pensions debate in that people focus on the extremes (bankers bonuses and council leader final salary schemes) and not general schemes most applicable employees are on.

http://www.guardian.co.uk/education/2004/mar/16/schools.uk3

The National Union of Teachers (NUT) rejected the government's proposals to extend the existing pay scale by introducing a new Excellent Teachers Scheme, which relies heavily on performance-related pay

"The extension of performance related pay based on pupil progress to the main scale will further demoralise and demotivate teachers and make the profession less attractive."

What do you think TJ - were the unions looking to reward the excellent teachers, or protect the crap ones?

One has to wonder what they were afraid of?

😉

That makes my point - the threat of the sack is being used to motivate teachers. surely they should be being offered bonuses as according to you guys that is the only way to motivate staff?

So in the hypothetical situation where teachers were given identical basic salaries and offered discretionary bonuses to be based on pre-arranged and agreed (sensible) performance targets, what do you think would be the outcome for (a) teachers, (b) pupils, (c) schools?

DS, some services are just that, not revenue generators.

Profit based bonuses in Care for example would lead to corners being cut, to the detriment of the Service Users.

Safeguards and regulation just don't work where the ethos of profit replaces the fundamentals of care.

That makes my point - the threat of the sack is being used to motivate teachers

That does not make your point, your point was that UNLESS teachers did their BEST they would be sacked. That's not true. If teachers are average, or even slightly below average they're fine, as has been the case for decades. If they are complete tripe, then they will be sacked. Which is sensible.

On the other hand if someone in the banking industry is just average, they will be sacked. If they work their nuts off to achieve greatness, they will be rewarded.

Profit based bonuses in Care for example would lead to corners being cut, to the detriment of the Service Users.

Or they could lead to services being delivered more efficiently with no consequence to Service Users other than a reduction in cost. The difficult bit is working out which has happened and that is where the failure of such systems often occurs in both the private and the public sector.

If you happen to think that growing inequality is a bad thing (I do) then big bonuses are bad.

If you think that bonuses mean this then I guess they aren't too bad.

This sums up the main issues, for me...

If the company is doing well, based on the [u]collective[/u] input of the workforce, then it is reasonable that a bonus is widely distributed - the JL model.

FWIW, from many of the business I have worked with (directly and as a consultant) it is the collaborative effort that makes a business profitable. The posts above about intellectual based organisations are interesting because that is the sort of area I have knowledge of, and the research fits well with my views on this.

On the other hand, for businesses that [i]do[/i] arrive at success through outstanding individual effort, then it is right to recognise and reward that effort.

The common mistake is to (financially) recognise and incentivise individual achievement in a team oriented setting / culture - you do need to motivate, but the whole team.

Profit based bonuses in Care for example would lead to corners being cut, to the detriment of the Service Users.

Isn't this like the pensions debate those who haven't want the others brought down to their level instead of striving to get that themselves.

No. This is TJ banging his drum until we all agree with him that there is an unjust difference between teachers and bankers. He has a view and we must all bow down and see the world from his POV otherwise he will consume all of the internet with his arguements.

Or at least that's how I see it 🙁

TJ seems to think that it would increase productivity and motivation and would be a good idea.

Really - where did I say that?

I am still awaiting some sort of rational explanation why some groups of employees have to have large sums of money dangled in front of them to be motivated to do their best and it is considered acceptable that they will not perform at their best unless this is done when other groups of employees will apparently perform of their best without any incentives but they are threatened with the sack if they do not perform of their best.

tootall - its exposing the hypocrisy of the bonus culture.

The company owners reduce the time available for calls and squeeze more clients in - care is spread too thinly.

People genuinely suffer because of this.

It's not rocket science, surely you can see this?

Teaching is a real can of worms - the pay structure needs a root and branch review as it is set up to cause stagnation and disatisfaction.

mrs rkk01 changed career about 4-5 yrs ago, and is doing very well. Repeated "outstanding" inspection results, developing a resource base that is recognised throughout the county, and is highly in demand due to her methods and approach. Has networked and developed excellent relationships with other staff, parents and outside supporting professionals....

She brings with her previous professional management experience and a good knowledge of social interaction / behavioural psychology.

[b]She is one of the lowest paid teachers in the school 👿 [/b]

Why? - because teachers are paid on a "time served" basis.

Good, experienced, teachers in her school CANNOT progress to other, more rewarding senior roles (which would meet their aspirations), because "they are too expensive"

So, you can move schools when you are cheap, and inexperienced...

You are cheap when you are inexperienced (in teaching terms, other expertise counts for jack) - irrespective of your performance???

The whole thing seems set up to frustrate and demotivate.

Scrap the salary increase by time served nonsense. promotion and pay should be based on performance / achievement

TandemJeremy - Member

That makes my point - the threat of the sack is being used to motivate teachers. surely they should be being offered bonuses as according to you guys that is the only way to motivate staff?
Posted 42 minutes ago # Report-Post

There will always be sloppy employees though.

Anyway, is it not the case that the bonus simply represents a portion of the total package that could be withdrawn in an extreme case much more easily than paying half someone's wage..?

I don't think it matters that half their salary is expressed in terms of bonus. It's only a word.

TandemJeremy - Member
That makes my point - the threat of the sack is being used to motivate teachers. surely they should be being offered bonuses as according to you guys that is the only way to motivate staff?

Hah if only that were true. The reason we need Academies and Free Schools is precicely so that teachers can made accountable to the headmasters and parents. There hasnt been ANY threat of the sack in LEA run comprehensives. That will remain the case in unreformed Scotland.

Bonuses are good, they can make you work harder and better and promote innovation. In banking they grew too much and became something that people felt the were entitled too. That is no longer the case, believe me.

TJ you choose to work in the public sector, some of us work in business. Take off your hairshirt and stop being so bloody patronising.

tootall - its exposing the hypocrisy of the bonus culture.

To whom? Get a blog.

Errmmm- academies and free schools perform worse at higher cost than LEA schools so that shows the paucity of that arguement.

So why do the private sector need bonuses for motivation but the public sector do not?

does anyone actually have an answer to this?

TooTall, +1 and 😆

As this now looks like it's going to turn into a 'Lets have a go at TJ' thread I'll leave it there.

Shame, some interesting points raised.

teachers are paid on a "time served" basis

I've always wondered why teachers get a bonus for just being there another year. Anyone care to explain that one? Does it happen elsewhere in the public sector?