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Bonuses are not to be considered to be pay for performance. They are to be considered as a part of pay that can be withdrawn if either the company does badly a

by jbb555 10y ago

Bonuses are not to be considered to be pay for performance. They are to be considered as a part of pay that can be withdrawn if either the company does badly and can't afford it, or if the employee does visibly badly. They are a good thing for the company because they can decide not to pay it, except in as much as they allow the company to pay more because they can withdraw it if necessary

sidlls 10y ago
Bonuses for executives or bonuses for regular employees? Every bonus item in any employment package I've had has always been tied to the company's performance and my individual performance. I have never once worked anywhere with an automatic, performance-independent bonus, from tiny shops working as government contractors to large and well-known corporations. This is anecdotal, obviously, but I'm talking about myself and literally hundreds of thousands of other employees across all the organizations I've worked for. I am not denying such bonus structures exist in some places, but I'm skeptical that it's common or not considered an extreme aberration.
- TeMPOraL 10y ago
  I don't know if it's common, but I'm currently employed in such a company. Basically, at the interview I asked for $X / month after benefits[0] and taxes, and what I'm being paid is ($X - benefits - taxes) / month base, + performance bonus equal to the amount that went to the government in my name. I get the bonus by default, but they can suspend it if I perform visibly badly. [0] - don't know the right English vocabulary for that; in Poland, if your employer pays you X directly, then he actually costs you Y, where Y > X, and the difference is what he pays as a contribution to your social security and health insurance. EDIT I was misremembering things, so I doublechecked my payslip and fixed the comment to reflect "real reality".
  - sidlls 10y ago
    So your bonus is linked to your performance.
    - TeMPOraL 10y ago
      Technically yes, but I get it by default, and only lose it for substandard performance.
  - lutorm 10y ago
    Interesting arrangement. If your tax rate goes up, does your pay go up too?
    - TeMPOraL 10y ago
      It probably will, though most likely only after renegotiation of contract. The bonus amount was calculated off the $X I asked for and is "hardcoded", not computed dynamically from the taxes and social/health payments. AFAIK we didn't have the (income) tax rate changes since at least 2009, so I don't know for sure.
logicallee 10y ago
This seems an odd view to take. What about cases such as traders who are able to make a loss of $200K for the company in one year (so that the company is really out their full $200K trading balance as a loss, plus their entire fully loaded HR cost) and a gain of $14M in another (exceptional) year? While you might call their positions only "luck", this is not how it's viewed in the financial industry, and IMO correctly. So what motivates the trader to go all out (if movies are any guide they even do drugs), 100 hour weeks, and making their staff and assistants work all weekend and nights, with super important and last-minute requests disrupting everyone's lives, in order to help close the position with the right timing, that will net the company $14M? You think he should really have a $800K salary with $650K of that as a bonus "not to be considered to be pay for performance?" Plus, the more leveraged the trader is, then depending on the mechanism it could be far less expensive if he fails but a far more spectacular win if he is motivated to put in the time. Further requiring pay for performance. A last example is in the startup scene, where equity is seen to be a motivating factor that makes people billions, who (as an actual fact, this is actual reality we're talking about) would not have done the same work for ANY salary "to be withdrawn"? When you take a founder who makes a $1B company in 7 years as CEO there is, quite literally no salary "including a non-performance pay bonus" that results in the exact same CEO creating the exact same $1B of value in the same time period. I'm not talking about where the financing comes from. I mean that the CEO just wouldn't achieve the same result. there are some performance outcomes you just can't buy (even if they are the exception rather than the rule.)
Skunkleton 10y ago
Even if bonuses were meant as pay for performance, then 10% is still better than 0%.

by jbb555 10y ago

sidlls 10y ago

Bonuses for executives or bonuses for regular employees? Every bonus item in any employment package I've had has always been tied to the company's performance and my individual performance. I have never once worked anywhere with an automatic, performance-independent bonus, from tiny shops working as government contractors to large and well-known corporations. This is anecdotal, obviously, but I'm talking about myself and literally hundreds of thousands of other employees across all the organizations I've worked for. I am not denying such bonus structures exist in some places, but I'm skeptical that it's common or not considered an extreme aberration.

TeMPOraL 10y ago
I don't know if it's common, but I'm currently employed in such a company. Basically, at the interview I asked for $X / month after benefits[0] and taxes, and what I'm being paid is ($X - benefits - taxes) / month base, + performance bonus equal to the amount that went to the government in my name. I get the bonus by default, but they can suspend it if I perform visibly badly. [0] - don't know the right English vocabulary for that; in Poland, if your employer pays you X directly, then he actually costs you Y, where Y > X, and the difference is what he pays as a contribution to your social security and health insurance. EDIT I was misremembering things, so I doublechecked my payslip and fixed the comment to reflect "real reality".
- sidlls 10y ago
  So your bonus is linked to your performance.
  - TeMPOraL 10y ago
    Technically yes, but I get it by default, and only lose it for substandard performance.
- lutorm 10y ago
  Interesting arrangement. If your tax rate goes up, does your pay go up too?
  - TeMPOraL 10y ago
    It probably will, though most likely only after renegotiation of contract. The bonus amount was calculated off the $X I asked for and is "hardcoded", not computed dynamically from the taxes and social/health payments. AFAIK we didn't have the (income) tax rate changes since at least 2009, so I don't know for sure.

logicallee 10y ago

This seems an odd view to take. What about cases such as traders who are able to make a loss of $200K for the company in one year (so that the company is really out their full $200K trading balance as a loss, plus their entire fully loaded HR cost) and a gain of $14M in another (exceptional) year? While you might call their positions only "luck", this is not how it's viewed in the financial industry, and IMO correctly. So what motivates the trader to go all out (if movies are any guide they even do drugs), 100 hour weeks, and making their staff and assistants work all weekend and nights, with super important and last-minute requests disrupting everyone's lives, in order to help close the position with the right timing, that will net the company $14M? You think he should really have a $800K salary with $650K of that as a bonus "not to be considered to be pay for performance?" Plus, the more leveraged the trader is, then depending on the mechanism it could be far less expensive if he fails but a far more spectacular win if he is motivated to put in the time. Further requiring pay for performance. A last example is in the startup scene, where equity is seen to be a motivating factor that makes people billions, who (as an actual fact, this is actual reality we're talking about) would not have done the same work for ANY salary "to be withdrawn"? When you take a founder who makes a $1B company in 7 years as CEO there is, quite literally no salary "including a non-performance pay bonus" that results in the exact same CEO creating the exact same $1B of value in the same time period. I'm not talking about where the financing comes from. I mean that the CEO just wouldn't achieve the same result. there are some performance outcomes you just can't buy (even if they are the exception rather than the rule.)

Skunkleton 10y ago

Even if bonuses were meant as pay for performance, then 10% is still better than 0%.