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.

Which is nice.

😀

😀

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.

= 100%

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…

= 110%
I’m beginning to see a problem here.

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.

This is the most fallacious argument EVAR.

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.

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 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?

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…

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.

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!

I couldn’t agree more that to you it’s an absolute disgrace, but to others it’s a wholeheartidly accepted method for motivating people. The more you put in, the more you get out as opposed to earning the same whether you work hard or do F. all.

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.