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I think it makes sense in practice too, if you accept some incentive scheme. Perhaps no incentive is the best incentive, but I don't know the data on that. In

by Cogito 5y ago

I think it makes sense in practice too, if you accept some incentive scheme. Perhaps no incentive is the best incentive, but I don't know the data on that. In my experience there was never a huge disconnect between an individual's performance and their expectation of their bonus. Your starting point was based on your position - say 5% for junior positions and 10% for senior positions. The thing you had control over was if that starting position went up or down. There are 5 performance review levels, and each has a matching percentage associated with it. A '3' is "doing your job satisfactorily" and gives your base of say 10%. A '4' might be 15%, '5' 20%, '2' 5%, and '1' 0% (I don't remember if they actually went to 0% or not). The last important factor is the companies overall success, but that is largely out of your hands so it 'is what it is'. The bigggest downside with this system is that it's not capable of handling everyone getting a '5'. If you really had a team of superstars it would be a hard and long battle to get them all recognised (though I did see that happen on occasion).

tharkun__ 5y ago
I always find it fascinating when employees try to justify these schemes. Both the bonuses and the rating systems. Yes, all of your team can be 5s. They can all exceed expectations. And that's what each individually thinks too. He's gonna be so much better than everyone's else. Most people think that. Of course the system is rigged. It's not really about exceeding your expectations. Even when they try to make it seem like it's possible. It's about making a nice bell curve of the ratings and assigning bonuses and salary increases based on it. If you're at the wrong company they also fire the bottom 10% or something like that. Why they do this I will never understand. It kills intrinsic motivation (even for the 'exceeding' guys as seen in previous comments). Google the Oprah experiment. It kills morale if the company doesn't make it one time. It kills morale for the guys that don't get the bonus they wanted or makes them game the system. Which kills morale for the guys that are actually good at their job but don't care about gaming the system. So much to loose.
jboy55 5y ago
The issue with the scheme was that, a) it was overly complicated and huge individual performances were just washed out in the larger mix b) It had the appearance of giving a great deal of control to the employees in driving their 'bonus'. However, in the end, the decisions made at the highest levels made the entire process moot. For example, A goal for YoY rev increase of 100%, was a failure when it hit 80%. The hiring and spending required to try and hit that 100% growth target, made profit a 2nd priority. As a manager, all the personal goals were interesting behavioral levers, but all that was lost when the bonus kept not being paid. "We're tracking all of this for our Goals, which informs our bonus, but our bonus never gets paid because the ceo says its ok we shouldn't be making a profit now cuz we're growing."

by Cogito 5y ago

tharkun__ 5y ago

I always find it fascinating when employees try to justify these schemes. Both the bonuses and the rating systems. Yes, all of your team can be 5s. They can all exceed expectations. And that's what each individually thinks too. He's gonna be so much better than everyone's else. Most people think that. Of course the system is rigged. It's not really about exceeding your expectations. Even when they try to make it seem like it's possible. It's about making a nice bell curve of the ratings and assigning bonuses and salary increases based on it. If you're at the wrong company they also fire the bottom 10% or something like that. Why they do this I will never understand. It kills intrinsic motivation (even for the 'exceeding' guys as seen in previous comments). Google the Oprah experiment. It kills morale if the company doesn't make it one time. It kills morale for the guys that don't get the bonus they wanted or makes them game the system. Which kills morale for the guys that are actually good at their job but don't care about gaming the system. So much to loose.

jboy55 5y ago

The issue with the scheme was that, a) it was overly complicated and huge individual performances were just washed out in the larger mix b) It had the appearance of giving a great deal of control to the employees in driving their 'bonus'. However, in the end, the decisions made at the highest levels made the entire process moot. For example, A goal for YoY rev increase of 100%, was a failure when it hit 80%. The hiring and spending required to try and hit that 100% growth target, made profit a 2nd priority. As a manager, all the personal goals were interesting behavioral levers, but all that was lost when the bonus kept not being paid. "We're tracking all of this for our Goals, which informs our bonus, but our bonus never gets paid because the ceo says its ok we shouldn't be making a profit now cuz we're growing."