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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 fair
by 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 agoI 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 agoI 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.
- giantg2 6y agoOr if they don't follow their own rules
- giantg2 6y ago"Incentives happen because they are empirically effective." Only for the people who haven't been screwed by the system.
- dan-robertson 6y agoHonestly I feel like you have a lot more faith in businesses behaving efficiently[1] than I do. I think the normal reason for a firm to do things is random chance/business school/copying competitors. See also: “algorithms” style interview questions, brain teaser style interview questions, and using complicated distributed tools like Hadoop. [1] by efficiency, I mean settling on doing the most effective things and dropping ineffective things.
- smitty1e 6y agoMaybe it's a function of scale. My remark was founded upon my recollection of being enlisted in the Navy at the end of the Cold War. Want a fat bonus? Go nuclear. Everyone knows where the money is, how much, when the figures are reviewed, etc.
- enkid 6y agoFrom what I have read, monetary incentives are only effective in specific circumstances. If used the wrong, it can even decrease performance.
- avisser 6y agoFull-throated agreement. I'm actively interviewing elsewhere. The $600 I got in my employers recent "equity event" felt like a slap in the face for 4 years of service.