3 ms·

It also opens the possibility of giving a team of all rockstars, if they're (as a team) performing highly, a bigger reward pool that can be split evenly between

It also opens the possibility of giving a team of all rockstars, if they're (as a team) performing highly, a bigger reward pool that can be split evenly between them. I seem to think it's much easier to convince them your awesome team producing awesome products (and taking in awesome money) should get extra money to spend than it is to convince people you shouldn't have to rank any of your employees lowly when they all have to.

potatolicious 13y ago
I honestly don't even get why reward pools are such a big deal. I do work for you, I am owed compensation based on terms we've negotiated before I started working for you. From time to time these terms will come up for renegotiation. There is no need for compensation in excess of what we've negotiated. Sure, I am not one to turn down free money, but understand that this does not affect our normal compensation discussions. My work is worth $X on the market. I expect that you will pay me $X (or come up with alternative forms of compensation that are mutually agreeable). I will not sign a deal that adds up to $X where part of the compensation is discretionary. My work is worth what it's worth. If it is not up to your satisfaction, you are free to terminate this relationship or renegotiate my pay. You may not unilaterally decide to pay me less than what we agreed upon, and I will not submit to a system that allows this. Which is to say, you will be unsuccessful if you try to persuade me to lower my base salary on the promise of "bonuses". I feel that "bonuses" are just ways to hoodwink people who haven't been around the block. Every time I have come across bonuses of this variety, it has been an excuse to lower your base salary. I have never once received the full possible bonus, even though I have been promised multiple times prior to joining the company that "everyone" gets the full amount, and that only very poor performers don't. I have never received a poor performance review. If you do not pay me $X, whether in salary or in bonuses or in suitcases of bacon, I will leave. I do not give one flying hoot about stack ranks, bonus pools, or any such nonsense. I am not willing to inject uncertainty into my income without a proportional upside for myself. Discretionary bonuses are full of shit.
- dllthomas 13y ago
  The purpose of discretionary bonuses is to address imperfect (and potentially asymmetric) information about just how much you really are worth. It can be easier to assess post-hoc. Whether it actually does this well is certainly an important question, as well as how it can be abused and how frequently that happens, but it seems remiss to rail against them without noting their intended purpose - which, in the abstract, seems entirely legitimate.
  - potatolicious 13y ago
    Assessing performance post-hoc doesn't necessarily entail discretionary bonuses. If I am not performing to expectations, fire me or renegotiate my salary. There are a great many ways to tune my compensation to my actual determined worth. A discretionary bonus in this case is simply "you should take a below-market salary until we're convinced you're the real deal, and then maybe you will get the salary difference back". I'm not convinced anyone who isn't desperate will take this deal. And having experienced the discretionary bonuses at two very large and well-known software companies, I am absolutely, completely, vehemently disinclined to ever enter into such an arrangement again. For discretionary bonuses to make even the most remote amount of sense, it needs to offer the employee an upside for taking on the uncertainty.
    - SubuSS 13y ago
      It depends on the numbers involved too. Many companies give you a market rate and a bonus (sign on / stock RSU/ cash bonus etc) on top of it to incentivize extra work / ownership. My case: my base salary is pretty competitive considering the market/location. I also get a stock award on top of that based on my future potential / current work etc. For me, the stock component has been a reasonable contributor to the final net take home. Essentially: you work hard, you can potentially make 2x-3x your base and this multiplier only goes up as you go up levels. I am not against discretionary bonuses like the above (obviously :). Come for the base, toil for the bonus.
      - 13y ago

potatolicious 13y ago

I honestly don't even get why reward pools are such a big deal. I do work for you, I am owed compensation based on terms we've negotiated before I started working for you. From time to time these terms will come up for renegotiation. There is no need for compensation in excess of what we've negotiated. Sure, I am not one to turn down free money, but understand that this does not affect our normal compensation discussions. My work is worth $X on the market. I expect that you will pay me $X (or come up with alternative forms of compensation that are mutually agreeable). I will not sign a deal that adds up to $X where part of the compensation is discretionary. My work is worth what it's worth. If it is not up to your satisfaction, you are free to terminate this relationship or renegotiate my pay. You may not unilaterally decide to pay me less than what we agreed upon, and I will not submit to a system that allows this. Which is to say, you will be unsuccessful if you try to persuade me to lower my base salary on the promise of "bonuses". I feel that "bonuses" are just ways to hoodwink people who haven't been around the block. Every time I have come across bonuses of this variety, it has been an excuse to lower your base salary. I have never once received the full possible bonus, even though I have been promised multiple times prior to joining the company that "everyone" gets the full amount, and that only very poor performers don't. I have never received a poor performance review. If you do not pay me $X, whether in salary or in bonuses or in suitcases of bacon, I will leave. I do not give one flying hoot about stack ranks, bonus pools, or any such nonsense. I am not willing to inject uncertainty into my income without a proportional upside for myself. Discretionary bonuses are full of shit.

dllthomas 13y ago
The purpose of discretionary bonuses is to address imperfect (and potentially asymmetric) information about just how much you really are worth. It can be easier to assess post-hoc. Whether it actually does this well is certainly an important question, as well as how it can be abused and how frequently that happens, but it seems remiss to rail against them without noting their intended purpose - which, in the abstract, seems entirely legitimate.
- potatolicious 13y ago
  Assessing performance post-hoc doesn't necessarily entail discretionary bonuses. If I am not performing to expectations, fire me or renegotiate my salary. There are a great many ways to tune my compensation to my actual determined worth. A discretionary bonus in this case is simply "you should take a below-market salary until we're convinced you're the real deal, and then maybe you will get the salary difference back". I'm not convinced anyone who isn't desperate will take this deal. And having experienced the discretionary bonuses at two very large and well-known software companies, I am absolutely, completely, vehemently disinclined to ever enter into such an arrangement again. For discretionary bonuses to make even the most remote amount of sense, it needs to offer the employee an upside for taking on the uncertainty.
  - SubuSS 13y ago
    It depends on the numbers involved too. Many companies give you a market rate and a bonus (sign on / stock RSU/ cash bonus etc) on top of it to incentivize extra work / ownership. My case: my base salary is pretty competitive considering the market/location. I also get a stock award on top of that based on my future potential / current work etc. For me, the stock component has been a reasonable contributor to the final net take home. Essentially: you work hard, you can potentially make 2x-3x your base and this multiplier only goes up as you go up levels. I am not against discretionary bonuses like the above (obviously :). Come for the base, toil for the bonus.
    - 13y ago