The Big Shift From Salaries To Bonus-Based Pay (msn.com) 51
More American workers are seeing their compensation tied to performance metrics, a shift from traditional fixed salaries. A 2024 survey by Alexander Group found 28% of over 300 companies are incorporating incentive pay into new roles, extending a practice once limited to sales and executive positions. Employers argue this model boosts productivity, while some workers report earning less than expected, WSJ reported Monday.
Can't plan for the future (Score:5, Interesting)
If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.
Re: (Score:3)
Indeed, it does. Somehow American employers do not get that.
Re: Can't plan for the future (Score:2)
Let me guess:
the bonus is based on (e.g.) Jan - Dec, but payroll / annual reviews need a few months to calculate entitlements. So you *have* to remain an employee until March / April to be entitled to the payment. Even more sleazy.
Re: (Score:2)
Re: (Score:3)
Several years back in government Congress put aside a certain amount of money for bonuses for all federal e
Re: (Score:1)
One thing I note from the idea of a contest is that one party benefits from all the work of the competition entrants but only one entrant benefits when they 'win'.
Perhaps short-sighted employers will use this type of model soon; "This month 'George' showed outstanding conversions so his family will eat (for a month)"
Re:Can't plan for the future (Score:5, Insightful)
If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.
Counterpoint: if you can't reliably earn enough off your own skillset in a bonus/commission model, you don't deserve a salary that is piggybacking off ME.
Counter-counterpont: if you don't know already know whether I'm pulling my weight, then you're not managing your business well.
Re: (Score:2)
Counter-counterpont: if you don't know already know whether I'm pulling my weight ...
What about a new employee just hired?
A fixed salary means they may be overpaid ... or quit because they're underpaid.
Bonus-based compensation means they'll be paid what they earn.
Re: (Score:2)
Or they'll be paid what management wants to pay them and if necessary a productivity issue will materialize from the aether to "justify" it.
Re: (Score:2)
How about the opposite way around, The employee will take a huge salary and give the company a bonus if they provide them with a good working environment. Of course what is a good environment is up to the employee.
Maybe we can extend this to doctors, I will pay you a small base amount for the surgery if I think you did a good job then I will pay you more. Next time you get an operation see how that idea flies.
All I see is this is working for tips for everyone. OK not for everyone, everyone but the rich.
Re: (Score:2)
That's assuming the commission is actually figured correctly. I wouldn't trust HR to do math on a wet paper bag.
Re: (Score:3)
Counter-counterpoint B: Regardless of how reliably I actually earn bonuses, my mortgage provider isn't going to count them as trustworthy income...
Re: (Score:2)
Hell yeah, you must be one of those "atom sized black hole" CEOs I just read about.
Re: (Score:2)
Counter-Counter-Point: If your employer says that you didn't meet expectations and therefore you don't get a bonus it doesn't matter what you actually DID because they have all the power at that point. Sure you can quit right then and there and look for a new job, but that doesn't pay the mortgage due today.
Re: (Score:3)
If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.
My personal experience with compensation plans goes like this: 90/10 (or 85/15 in 1 case) split. 90 percent is predictable salary. 10 percent is "at risk", paid out if you meet your goals (established by you & your manager at the start of the calendar year and possibly with a reasonable Corporate-level goal added). Any bonus payouts beyond that 10 percent were either defined with a known set of "extraordinary goals" (125 percent of sales target or whatever), OR, based solely on a high-level management d
Re: (Score:3)
From my past experience, we paid good bonuses to our best staff... and "something" to everyone else in normal years. In great years everyone got more and it took some pressure off raises. In bad years, bonuses were lower, but we tried to be more strategic with raises to make sure total compensation was inline. That dance might sound supportive of the parent's case, but what it ends up doing is making employment much more variable. Labor was about 35% of our costs, and we had a net margin of around 15% befor
Re: (Score:1)
If your department at the company isn't profitable and expenses don't scale with income, some of you are getting fired or passed up for raises anyway. So might as well get bonuses based on performance.
Re: (Score:2)
Right, just live with it. Remember, companies learn from this sort of behavior.
Re: (Score:2)
Loyalty died 60 years ago. These days, the name of the game in negotiation is attack.
Oh, yeah, HUGE shi...ft. (Score:4, Insightful)
Re:Oh, yeah, HUGE shi...ft. (Score:4, Interesting)
Even when it does happen, a $500 bonus only costs the company once where a $500 raise costs the company $500 every year.
A $500 bonus can be given every year and it feels like they're getting something where if they give a $500 raise, they'll be expected
to give a raise the next year as well.
Look for more Unionization (Score:5, Insightful)
This is going to push several workers into unionization because while this might start out where employees are pushed to be more productive, this will become easily exploited with moving targets that become unrealistic.
On top of this, if you deploy such a measure poorly, you could easily create divisiveness in the workplace where employees sabotage each other to prevent one team or another from getting a bonus while subverting others to get their own bonus.
This is something we see in libertarian organizations that sounds good as an ideal but doesn't pan out and more than likely implodes.
Re: (Score:3)
Re: (Score:2)
>>this will become easily exploited with moving targets
Every time. The thermostat always gets cranked, should normalcy dare approach. See also:
"When a measure becomes a target, it ceases to be a good measure." --Goodhart's Law [wikipedia.org]
Re: (Score:2)
This is something we see in libertarian organizations that sounds good as an ideal but doesn't pan out and more than likely implodes.
I call bullshit. Citation needed.
Expect it to be slowly reduced (Score:2)
Re: (Score:3)
That is probably the plan here. Good bonus payments mean that either a) the system is fair (it will not be) or b) you are C-level (most people are not, obviously)
My take is that this is just a camouflaged pay reduction for anybody doing actual work.
Re: (Score:1)
Re: (Score:2)
Our corporatist oligarchy is, has been, and will continue to squeeze the plebs for every bit of wealth stopping only just short of actual armed revolt, the likelyhood of which they're working to reduce by other means. coughcoughguncontrollcough
There's not going to be an armed revolt against the oligarchy so long as the armed folks are all convinced their "enemy" consists of the other plebs who happen to have a different opinion on various social issues. The distraction tactic works.
Re: (Score:2)
That can work for a year or maybe two... after that people catch on and stand up for themselves. Going from a 30% bonus down to 10% would get most people to quit in a flash. Going from 5% to 3% is not quite as much of an impact.
Been there done that (Score:4, Insightful)
Incentives Aligned! (Score:3)
If there's even a bit of wiggle room in the metrics used to judge 'performance' the whole exercise basically becomes a salary negotiation but with extra steps, a veneer of objectivity, and a lowball default: when you can both assign someone a performance number and are on the hook for paying them based on their performance number your incentive is to just rank everyone as "you should be thanking me for not firing you" unless you are really afraid that they'll walk: which isn't really "bonus-based"; it's just how salaries work, except that now you are going through an insulting charade every time. Hooray.
If the bonuses are based on company performance rather than individual performance there's less room for just gaming the metrics; but the relative helplessness of any individual employee in determining the success or failure of a company of any nontrivial size makes those profoundly dispiriting unless they are actually pure 'bonus' on top of an acceptable salary: how is it going to encourage performance if you can do your job well or badly and your bonus is basically a coin toss based on broader economic conditions or whether consumers want red widgets but you make blue widgets or whether blue widgets are super popular this year?
Had a job like that.... (Score:4, Interesting)
The incentive was monetary targets.... The problem was that I valued delivering customer experience and relationships over taking them for every dollar I could. Probably why I now work in a large government funded organisation these days. In that previous job, clients would rather wait for me to become available than to have other techs come instead, and if I said they needed xyz they'd write a cheque there and then because of the trust built.
However, management only saw dollars generated and so thought I was underperfoming.
I think I only ever hit the target set for me once in the time I worked there. However, I had the happiest and most loyal customers. Go figure.
Good idea in theory (Score:2)
As with most things, this is good in theory and likely terrible in practice. This fixes a lot of the issues of people doing just enough to get by and counting on the people who are motivated to keep things going and actually getting things done. The issue is usually the performance metrics are built around the absolutely highest performers, meaning those who can't spend 60 hours a week working end up making less. Those people who come in and work hard but aren't willing to devote their life to the job end u
Another MBA-screw job (Score:2)
Don't fall for this (Score:3)
I got forcibly switched from a wages + overtime model to a salary + performance bonus model around 2008. It's a scam. Your metrics will always be based on something you don't have direct control over, and they will always be "stretch goals," which is code for "almost impossible to meet." The only person who received performance bonuses there was the HR manager.
I left there two years later and went back to a wages + overtime model where 5 hours of overtime per week is expected during normal times (45 hours total). It's much better. When things are busy I don't mind working extra overtime and getting paid for it, and when things are slow the company can cut overtime to reduce costs without resorting immediately to layoffs. The only time the company had any layoffs in the last 15 years was for about 1 month at the beginning of COVID, and then everyone was brought back.
Don't forget payment delays (Score:2)
Misnomer (Score:1)
Quite often the bonus-based portion of an employees compensation is only slightly determined by the individual's performance. It is mostly determined by factors largely beyond the employee's control - like performance of the company as a whole.
In this situation, the bonus-based portion is more of a tool by which the company can quickly make adjustments on cashflow - much more difficult to do with the fixed portion of the salary. But it does have to be advertised as part of a "reward for performance" culture
Crisis in business - quiet quitting, etc. (Score:2)
The truth is simple - businesses have found themselves in a crisis. The pandemic forced a lot of people to reconsider their working lives - far too many people were living to work, and working to live.
That lead to things like quiet quitting and other things where bosses used to dangle incentives to work harder - promotions, pay increases, and other things. Of course, that stuff never happens - things like "you want a pay increase? you have to change jobs" and promotions going to outside people rather than f
\o/ (Score:1)
Rory Sutherland argues (paraphrasing somewhat) quite convincingly: ...that individual performance metrics harm the company overall in the long term - drawing a parallel with the behaviour of bees, a proportion of whom ignore the figure-eight-dance of other bees. Conventional wisdom might be that because these bees are communicating the location of sources of nectar, 100% observance of suggestions to 'go this way' are to the collective advantage.
" https://youtu.be/aRxq_E0SWzs [youtu.be]
He postulates that the 20
History and science (Score:4, Interesting)
Like tips, bonuses are a way of downloading risk from a company to the employees. Studies have shown that beyond a certain, surprisingly low, threshold, financial incentives lose their power to motivate. At some point employees come to depend on them and they're effectively salary that an employer can pull out from under you at any time.
If you want productivity, set clear expectations, hire well, pay appropriately. Anything less and you may get a temporary boost but in the long run you're headed downhill with dropping moral and bleeding your best producers.
Plain old capitalism is being phased out ? (Score:1)
The basic capitalistic premise is that the capitalist who owns the production means hires the worker's time hence a "fixed" pay regardless how much profit the worker generates.
Is the pay becomes function of the productivity the "employee" becomes a business partner and the "employer" should no longer have a say in how the time is spent.
This can go even further: the worker should be able to re-negotiate his tariffs at any time, after all if his pay is based on performance rather than assiduity, then he might
The goal is to spend less (Score:3)
"Employers argue this model boosts productivity, while some workers report earning less than expected"
The reason employers do this is to save money so of course earnings will be less than expected.
Assume no bonus in every salary negotiation (Score:3)
If I'm interviewing for a job, and there's a bonus potential, I don't even think about the bonus when deciding whether to accept the offer. The only part I look at is the salary part. The bonus is just gravy, if it happens. The thing about bonuses, is that they come and go, and companies can't resist constantly tweaking them to make them smaller. So if the fixed salary part is sufficient to meet my expectations, I'll consider the job. If I *must* have some or all of the bonus to make it work, the answer is no.
Lessons never learded (Score:2)
Bonuses are completely discretionary on the part of the business and as others have pointed out, can be easily gamed.
Just wondering if the captains of industry ever bothered to read up the lessons from the French Revolution.
I once worked for a telecom (Score:1)
...that rhymes with Slime Forner. Certain positions were paid bonuses based on performance stats, but the scoring rules grew ever trickier with more complex products/services, and the software couldn't keep up. For example, if there were a shortage of parts, they lost the "completed on time" bonus, but it wasn't their fault. The supervisor had to confirm there was a part shortage to reverse the time penalty, and sometimes they didn't bother to log it, or logged it differently for different employees.
And the