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The problem with bonuses is people just concentrate on whatever earns the bonus, not on what is best for the business. Bonuses work well when the metrics are ab

The problem with bonuses is people just concentrate on whatever earns the bonus, not on what is best for the business. Bonuses work well when the metrics are able to be measured accurately, but if not they can create a lot of unproductive behaviour (like sucking up to the boss).

natecavanaugh 9y ago
But isn't that a symptom of not being able to correctly identify what those metrics should be? I imagine that even actions that are somewhat indirectly associated with benefitting the entire business should be enumerable in some way and prioritized. I'm not saying it's easy (how do you prioritize community engagement vs new product development vs how those impact the business short and long term). But at the end of the day, you'll know best how you value those for your org, and how you want to rank them (along with the employee's actual execution of said goal), but sorting by a percentage of income instead of fixed amounts is probably the best course. Of course, my armchair quarterbacking is a lot easier than actually doing it :)
- danieltillett 9y ago
  Yes identifying the right metrics is certainly hard, but managing the conflict between them is even harder. As you rightly point out as soon as you have a few different metrics how do you decide their relative importance and how much time and effort on each one? Managing is a very difficult skill to master. I most certainly would not consider myself any more than a little above average and only because the average manager is so bad.
- jacques_chester 9y ago
  I recommend Measuring and Managing Performance in Organizations[0] to anyone who decides to start tinkering with bonus schemes. It's a short, sharp, quite readable explanation of why tying reward & punishment to metrics of difficult-to-observe work tends to quickly become destructive. [0] http://www.dorsethouse.com/books/mmpo.html http://www.dorsethouse.com/books/mmpo.html
zo1 9y ago
That's the "boss"'s or owner's problem (or prerogative). They saw something that they perceived was valuable to their business, and rewarded it accordingly. Whether that was through something fickle like "sucking up" or through valuable metrics. Again, it's up to the boss/owner to figure that out.

natecavanaugh 9y ago

But isn't that a symptom of not being able to correctly identify what those metrics should be? I imagine that even actions that are somewhat indirectly associated with benefitting the entire business should be enumerable in some way and prioritized. I'm not saying it's easy (how do you prioritize community engagement vs new product development vs how those impact the business short and long term). But at the end of the day, you'll know best how you value those for your org, and how you want to rank them (along with the employee's actual execution of said goal), but sorting by a percentage of income instead of fixed amounts is probably the best course. Of course, my armchair quarterbacking is a lot easier than actually doing it :)

danieltillett 9y ago
Yes identifying the right metrics is certainly hard, but managing the conflict between them is even harder. As you rightly point out as soon as you have a few different metrics how do you decide their relative importance and how much time and effort on each one? Managing is a very difficult skill to master. I most certainly would not consider myself any more than a little above average and only because the average manager is so bad.
jacques_chester 9y ago
I recommend Measuring and Managing Performance in Organizations[0] to anyone who decides to start tinkering with bonus schemes. It's a short, sharp, quite readable explanation of why tying reward & punishment to metrics of difficult-to-observe work tends to quickly become destructive. [0] http://www.dorsethouse.com/books/mmpo.html http://www.dorsethouse.com/books/mmpo.html

zo1 9y ago

That's the "boss"'s or owner's problem (or prerogative). They saw something that they perceived was valuable to their business, and rewarded it accordingly. Whether that was through something fickle like "sucking up" or through valuable metrics. Again, it's up to the boss/owner to figure that out.