Performance bonuses the way they are commonly done doesn't work in finance and sales either -- they're just so in-grained in the culture that it's impossible to

Performance bonuses the way they are commonly done doesn't work in finance and sales either -- they're just so in-grained in the culture that it's impossible to hire a finance or sales person without offering bonuses the common way. The problem is that individual performance is a much smaller factor of outcome than commonly believed. Organisational structure, luck, social standing in the organisation, etc play a much bigger role. So in the end, performance bonuses usually reward random variation more than individual prowess (as much as the recipients would like to think otherwise.) This one-armed bandit type compensation, when disguised as a performance bonus, creates confusion, weird incentives, limits creativity and experimentation, and breeds bad blood.