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Bonuses should be: infrequent, irregular, unannounced, and large. Otherwise you end up in this trap where people expect the bonus and worse yet, count on it to

Bonuses should be: infrequent, irregular, unannounced, and large. Otherwise you end up in this trap where people expect the bonus and worse yet, count on it to pay their bills. It’s stupid to make it a part of your overall compensation package because if you do, then the bonus is always weighted based on overall company performance. So if the company has a bad year no one gets bonuses even if individual teams crushed it. Conversely at most companies, everyone gets a bonus in good years even if you have underperforming teams. Add on top of that these stupid requirements that bonuses be paid out on exactly day X, and you end up with lots of people who do nothing until they collect that fat bonus check and then give their notice the next day. The bonus system as it stands at most companies incentivizes completely the wrong behavior.

ed25519FUUU 6y ago
> Otherwise you end up in this trap where people expect the bonus and worse yet, count on it to pay their bills. Kind of like tipping in the USA. It has nothing to do with service, is a standard percentage of the total bill (cork a $200 bottle of wine versus $20?). And the managers pay the wait staff less with the assumption they’ll make it up with tips.
- mjevans 6y ago
  I currently tip well. I would RATHER the costs be upfront and the complete wage and quality of service be covered by the company. I would, correspondingly, love to see both a national minimum wage increase AND a ban on including tips in someone's expected wage as a single update to the laws.
pnathan 6y ago
I would concur. The bonus system at prior fine employers usually looks like Company_perf_scaling * Bonus_pool * Group_political_pie_slice * Personal_perf; I usually assess it as "magic money". Yearly bonuses IMO should be rolled into base salary raises. Bonuses otherwise should be project based IMO. "Good job on the big projects, have xyz $/stock". Bonus structures for ordinary engineering / programming where a bonus might be >20% of total salary seems to be out of line with our normal work output.
kccqzy 6y ago
At Google there are bonuses known as peer bonuses and spot bonuses. They are indeed infrequent, irregular, and unannounced, though not large at all. People feel way happier receiving these sub-$1000 (or slightly above $1000) bonuses than the rather more predictable but large annual bonuses.
- jrockway 6y ago
  I thought the peer bonuses were like $175? I have a story. The first year I was at Google, I was working on payments. I remember checking the internal version of the documentation for our to-be-announced-at-Google-IO product, and noticed that it has accidentally been made available publicly, spoiling the surprise of the launch. Our director was visiting and was roaming around the office, so I flagged him down and let him know. (Actually, I spent quite a while convincing him that it wasn't some quirk that allowed guest WiFi addresses to also view secret documentation.) The end result was that he said "I'd give you a peer bonus, but I've already given my quota of peer bonuses this quarter." It was so awkward. I didn't even want or expect a bonus. I just wanted the problem to get fixed. (I also found it weird that directors / VPs are running around giving out peer bonuses. Pretty sure they had other ways to reward direct reports.)
jmchuster 6y ago
I think it helps employees if they understand that bonuses are not rewards, or for incentivizing behavior, though they might incidentally do that. They are built-in pay cuts that companies can use when their financials don't end up matching what they plan for. I've only ever been at one company that went out of their way to regularly present and show company financials in a digestible way, that when the year ended, it was clear to me at least why we got bonuses one year and why we didn't the other.

ed25519FUUU 6y ago

> Otherwise you end up in this trap where people expect the bonus and worse yet, count on it to pay their bills. Kind of like tipping in the USA. It has nothing to do with service, is a standard percentage of the total bill (cork a $200 bottle of wine versus $20?). And the managers pay the wait staff less with the assumption they’ll make it up with tips.

mjevans 6y ago
I currently tip well. I would RATHER the costs be upfront and the complete wage and quality of service be covered by the company. I would, correspondingly, love to see both a national minimum wage increase AND a ban on including tips in someone's expected wage as a single update to the laws.

pnathan 6y ago

I would concur. The bonus system at prior fine employers usually looks like Company_perf_scaling * Bonus_pool * Group_political_pie_slice * Personal_perf; I usually assess it as "magic money". Yearly bonuses IMO should be rolled into base salary raises. Bonuses otherwise should be project based IMO. "Good job on the big projects, have xyz $/stock". Bonus structures for ordinary engineering / programming where a bonus might be >20% of total salary seems to be out of line with our normal work output.

kccqzy 6y ago

At Google there are bonuses known as peer bonuses and spot bonuses. They are indeed infrequent, irregular, and unannounced, though not large at all. People feel way happier receiving these sub-$1000 (or slightly above $1000) bonuses than the rather more predictable but large annual bonuses.

jrockway 6y ago
I thought the peer bonuses were like $175? I have a story. The first year I was at Google, I was working on payments. I remember checking the internal version of the documentation for our to-be-announced-at-Google-IO product, and noticed that it has accidentally been made available publicly, spoiling the surprise of the launch. Our director was visiting and was roaming around the office, so I flagged him down and let him know. (Actually, I spent quite a while convincing him that it wasn't some quirk that allowed guest WiFi addresses to also view secret documentation.) The end result was that he said "I'd give you a peer bonus, but I've already given my quota of peer bonuses this quarter." It was so awkward. I didn't even want or expect a bonus. I just wanted the problem to get fixed. (I also found it weird that directors / VPs are running around giving out peer bonuses. Pretty sure they had other ways to reward direct reports.)

jmchuster 6y ago

I think it helps employees if they understand that bonuses are not rewards, or for incentivizing behavior, though they might incidentally do that. They are built-in pay cuts that companies can use when their financials don't end up matching what they plan for. I've only ever been at one company that went out of their way to regularly present and show company financials in a digestible way, that when the year ended, it was clear to me at least why we got bonuses one year and why we didn't the other.