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I actually think bonuses and equity grants are terrible for comapany morale. I've seen it many times, and heard many more stories. On top of the issue in this

• deleted 6y ago
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• sokoloff 6y ago
  If you pay a high salary, you create an incentive to just mark time and maximize the number of paychecks collected as well. If you pay in part in equity (or performance-based bonuses), you can balance that somewhat. No pay structure is a substitute for strong leadership, but each system provides pulls in certain directions.
  • smitty1e 6y ago
    > No pay structure is a substitute for strong leadership Can't emphasize this point enough. Frog$kins are necessary, but not sufficient, for retention. Especially when the talent has enough resources to decide that it isn't tolerating a manager or customer with the personality of a dented wastebasket.
    • bradleyjg 6y ago
      On the other hand a poorly designed or executed comp system will cause unhappiness and distraction even when everyone is paid well. It’s an unforced error of the business world.
      • greedo 6y ago
        We stack rank where I work. My mgmt can't imagine any other way to evaluate employee performance. And the manager I report to isn't very technical, so he can't evaluate actual performance. So he goes by tickets closed, word of mouth from his peers, and how gung ho you are. Since he's not technical, he can't set realistic goals for his staff. So promotions, raises and bonuses are all political.
  • Consultant32452 6y ago
    I think the equity thing might be real in a very small company, but I don't think it works the same at a mega-corp where your contribution is generally a drop in the ocean. For example, I currently work for a Fortune 500 financial company and the default company match option is in company stock. I don't think I've ever heard of anyone talk about doing their job better in the context of the stock price.
  • znpy 6y ago
    > If you pay in part in equity (or performance-based bonuses), you can balance that somewhat. that reminds me of a post i read some time ago... Basically anon was in the middle of a job interview with this startup. the founder/ceo was willing to pay an important part of the salary in stocks, arguing that the stocks grantet for first year alone would have meant anon would get at least one million dollar. Anon asks if the boss/ceo would be willing to pay no stock but sign an agreement to just pay out one million dollar in one year. After all, it should be the same amout of money, if not less, since the ceo was talking about "at least one million". Needless to say, the CEO did not agree.
• smitty1e 6y ago
  Incentives happen because they are empirically effective. I would contend that the issue is less the content of the incentives but rather the perception of fairness. If everyone is aware how the bonuses work and feels their 'fair' share is obtained, then it just becomes another part of the calculus. I speculate as a non-manager that bonuses are a good way (in the federal contracting realm, from the company perspective) to incentivize employees without inflating their base salary to the point that the company isn't competitive for new work.
  • Negitivefrags 6y ago
    > just becomes another part of the calculus. This is exactly what happens. So then why not just include it in the salary at that point? All you are doing with bonuses is just causing an opportunity for issues.
    • dan-robertson 6y ago
      I think changing a bonus is a lot easier than changing a salary, especially if the bonus can be tied to the performance of the firm and therefore go down—salaries tend to be very sticky (ie hard to decrease)
      • greedo 6y ago
        I think it's a wash. If your company is performing poorly and needs to cut costs, eliminating a bonus will cost you staff. Lowering salary will also cost you staff.
  • void_mint 6y ago
    > If everyone is aware how the bonuses work and feels their 'fair' share is obtained, then it just becomes another part of the calculus. If everyone is not aware of how a bonus works, lots of people assume it's just smoke and mirrors and disregard (the correct strategy). You're not incentivized to care about your "incentives", so you don't.
    • 6y ago
• alistairSH 6y ago
  Mostly agree. Bonuses should be a surprise to employees. Anything else just becomes an expected part of comp bundle.
• diogenescynic 6y ago
  Couldn't disagree more. Want to see employees work hard and be motivated? Give them equity that is a meaningful amount. I know it works for me... I work 10x harder for my current job where I have equity and stock bonuses than at previous jobs that were all salary.
  • ZephyrBlu 6y ago
    Why would you prefer equity/stock over cash? I would take cold hard cash over the same amount in stock any day of the week.
    • mavelikara 6y ago
      Keywords here are “same amount”. You are right - there is no reason to prefer equity over cash. Cash is better, if the company could afford it. But many employers cannot afford it now, and they offer equity instead.
  • bananaface 6y ago
    Do you work at a large company?
    • diogenescynic 5y ago
      Yes, previously at a ~$200b+ market cap and now at a ~$100b market cap company. Only difference is incentives--equity definitely works to motivate!
      • deleted 5y ago
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• bonestamp2 6y ago
  > I actually think bonuses and equity grants are terrible for comapany morale. Not just morale, even when things go well it can be a disaster. My wife's company just paid out a massive bonus and 5 people, nearly all of the people in this one small department, quit.
• Igelau 6y ago
  The bonus is a double-edged sword. There's nothing more demotivating than getting a bullshit explanation for why your bonus is reduced/non-existent.
• gscott 6y ago
  Bankers and Salespeople have a different structure they get a minimum salary too low to live on and then get bonuses based upon performance. My son was an O'Reilly Auto Parts store manager, turned out he didn't realize his salary was $500 a month until he was in an accident and was out for a six weeks... he was stuck, he had to go back to work even tough his femur was just broken in half.
• Rapzid 6y ago
  Startup I work for was acquired within the past year; came through as a "key employee". Don't like the new environment. Huge management hierarchy and management culture, command/control, siloed decision making, and etc. Unfortunately my reward, as such, is tied up in retention based compensation. Not phoning it in yet, but struggling to reach the 1 year cliff. Honestly coming around to the idea..
  • chris11 6y ago
    I've heard some places can make out of band offers to match unvested equity if they really want you.
    • Rapzid 6y ago
      Thanks, I suspected as much up to a point. I'm likely headed back to a more "lifestyle" business working directly for the founders though. Lifestyle in the sense that the company is aggressively focused on the work culture and including the engineering staff in the entire process of building the product/business. Worked at a place like that once and didn't appreciate it enough at the time. That's not the typical definition of a lifestyle biz.. Making it through the year is going to provide a significant boost to my retirement savings/investments and put compensation cut on the table so I can focus more heavily on work environment. Why am I saying all this? I guess I need to get it out and maybe it gives some further insight into how retention based compensation incentivizes people, and how acquisitions can cause a lot of stress to those who aren't getting the life altering payouts.
• Thorrez 6y ago
  >For example, if someone wants to leave, but the bonus or vesting is coming up, they will stay, and you don't want people on a project who don't want to be there. People shouldn't stay at a company based on money? Isn't money one of the main factors causing people to stay at a company? Or are you more saying they're staying only for a few months then quitting? Yeah, I see that. But maybe the answer isn't to get rid of bonuses and equity, but rather to spread them out over a long time. Don't have yearly stock vests, instead have monthly ones spread out over a year or more.
• fighterpilot 6y ago
  > but anything outside of a salary for compensation is just a bad idea. In the hedge fund industry, you can't be a successful firm without a bonus compensation model. - The profit is usual attributable exactly to specific people. If they don't get paid their share of what they brought in, they'll quit and go elsewhere where they can be paid their share, and you'll be left with all the worst people. - Some years are successful, and others aren't, meaning you can't have a stable high salary, since that will risk bankruptcy in unsuccessful years. You could adjust salary up and down each year, but that's no different to having a bonus. In a "normal" company where revenue is stable over time and each person's contribution isn't so easily quantifiable, I can see your point.
  • rightbyte 6y ago
    > If they don't get paid their share of what they brought in, they'll quit and go elsewhere where they can be paid their share, and you'll be left with all the worst people. You are selecting for lucky people that way not competent.
    • fighterpilot 6y ago
      To a large extent I agree. It'll come down to the type of strat they're running. If it's a very short holding period, performance is more correlated with skill, and the bonus should therefore be more correlated with individual performance.