Management Matters with Mike Myatt: Does Your Bonus Say Naughty or Nice?

This is the time of year where expectations are high and so is the volume of chatter around the water cooler in anticipation of that great corporate tradition--The Christmas bonus. So what's it going to be this year? A turkey, an extra paid day off, a cash bonus, something creative or nothing at all? In this week's column I'll take a look at the well intentioned but often misguided practice of year-end bonuses.

I can’t even begin to communicate the number of times I’ve heard employees complain about the size of their Christmas bonus. It was if they felt entitled to significant rewards solely based upon the fact that they happen to be employed. Is a year-end bonus a right of entitlement or a privilege to be earned? I believe that it can actually be both, but that decision lies solely with the employer and is not really up to the employee no matter how much they might feel it is.

Some employers believe in providing a little something extra to all employees during the Holiday Season as an expression of gratitude for their loyalty and contributions during the year without regard to performance. It is in this type of culture where I believe the employees expectations can easily confuse the difference between a gift and a reward. Let’s say that in the previous year the company provided what was considered by most to be a fairly generous bonus, but in this annum the company struggled while also needing to make heavy expenditures in Q1 of the upcoming year so it opted to distribute no year-end bonus. How do the employees feel about this?

One would hope that the employees would understand and put the needs of the enterprise ahead of their expectation that this year’s bonus should eclipse that of the previous year, but would they? I’m certain not distributing a bonus would only spawn a sense of resentment among many and the gossip at the water cooler would shift to criticizing the CEOs car or how much vacation time he/she took that year.

As contrasted with the environment discussed above, some cultures distribute annual bonuses based on a formulaic approach calculated on metrics designed to reward individual, team or company performance according to the goals of the specific entity. While many tend to favor this structure it is far from perfect as well. It is very typical that in this type of environment that the controversy shifts from company vs. employees to employee vs. employee. As an example the marketing assistant who receives a comparatively small bonus when contrasted to that of a sales person feels that his/her contribution is minimized and feels that they were treated unfairly. Imagine working at Goldman Sachs where bonuses in any given year are expected to range from secretaries receiving $10,000, analysts garnering close to $100,000, junior executives seeing as much as $2-4 million and top income producers receiving upwards of $40 million dollars in bonus money. You don’t think there’s a bit of green-eyed bonus envy at Goldman Sachs each year?

At the end of the day, employers should hire well, bonus generously and provide public thanks where merited. Employees on the other hand should be thankful for the privilege of having gainful employment and be grateful for any bonus compensation received. I hope you enjoy your bonuses and will perhaps consider giving some of your bonus to those less fortunate this season.

source: commercialpropertynews.com