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In my experience, bonuses are also very discretionary and completely opaque. I've seen countless offers touting a sizeable bonus at the entire discretion of the company with no way to know what are the criteria for award. And what do you know, nobody ever got these phantom bonuses because reasons. But it was included in offer letters and used to lower the negotiated salary as of it was a sure thing, and not everyone was savvy enough to push back.

I've worked at companies that document bonuses and companies that don't. Documented bonuses are a completely different situation.

My current employer is documented: it calculates your pro-rated fraction at each grade level for the bonus period two deal with promotions and then divides by 2 (bonus is paid out in two payments per year) and then multiplies grade level * company performance * employee performance. Any employee can calculate exactly how their manager ranked their performance. They can complain (or leave). With one weird exception people's grade levels are visible to others which means their bonus target is visible. For some people, 100% of their details (everything: base, etc.) are sometimes known to anyone who is interested (this applies to me).

(I should note that I don't think the compensation is transparent at VP level and above and know from experience there are tons of shenanigans there.)

When I worked for companies that did not document the bonus methodology, it was appalling. Bonuses were for glory hounds and friends of management. Terrible. A lot of employees didn't even know bonuses were paid.

I think the same issues exist for compensation (equity and base as well as special packages or retention bonuses) that exist for bonuses. It would be interesting to see if you could meaningfully execute a company with total transparency but I don't think it would survive contact with reality.

"It would be interesting to see if you could meaningfully execute a company with total transparency but I don't think it would survive contact with reality. "

I think you can. There are some companies that do it already and places like military and Congress (they fully publish salaries) are transparent without falling apart. Secrecy around salaries is just a tool for employers to keep salaries low.

It is a tool to keep salaries low, but when salaries are known, it can definitely create bitterness, jealousy, and resentment. "[X] definitely knows way less than me, has way less experience than me, and is a lot worse at their job, yet they're being paid almost double what I am" isn't great for morale.

That means in the long run employers would have to be fair or willing to justify salary decisions if they want to keep employees happy. I think transparency would create a better world overall.

Absolutely, I think in an ideal world it would. I'm not arguing against it. I just think in practice, it will tend to create issues which probably won't get resolved.

this is what I was referring to

someone else mentioned employers would have to be fair - yes, but that would not address the problem that 33% of your employees are crazy and/or delusional.

I don't think we should maintain bad policies because some people are crazy or whatever. In any case, that's not why salaries are secret. Employers would publish them in a heartbeat if it were profitable for them. They keep them secret because keeping people in the dark suppresses salaries.

Members of congress seem to make most of their compensation by other means. The military I don't really know.

https://www.theatlantic.com/politics/archive/2014/09/how-did...

I am talking about staffers. https://www.legistorm.com/salaries.html

More public salaries: https://publicpay.ca.gov/Reports/Explore.aspx

It's doable.

Public sector salaries are usually set through a very bureaucratic process, where the salary has everything to do with the position and little to do with subjective evaluations.

In the private sector, salaries have more to do with subjective criteria like "how much do I think this person is worth" or "will this person go looking for other jobs if I only pay x."

Envy is not as much of an issue when people in the same role all make the exact same amount. It is an issue when pay is set by the will of a manager/HR person whose perception of things differs wildly from the employee's perception (regardless of whose perception is more correct). That being said, paying people by perceived performance, for all its flaws, is still better than rigidly paying someone based on what the sign on their desk says, with no consideration of how well they actually do their job.

I work at a company where they're very transparent about bonuses. I've been told by the VP of my department that it's always advantageous to align my compensation with that of the higher-ups. They usually opt for higher base bonus percentage from their merit increases. Our base bonus percentage is not fixed. It can increase each year. You can start at a 9% bonus, but 3 years later it could be 15%.

Each year they announce how much, by percent, the bonus pool will be funded. And as long as I've worked there the bonus pool has been funded at >100%. The company is very fiscally responsible and they do everything in their power to meet their targets.

There are 4 categories of performance and if you meet the top two, you're guaranteed 100%. The policy for how much bonus % you receive is in the employee handbook. So your bonus is: (your base bonus percentage) * (performance percentage) * (bonus pool funding percentage) * (base salary). The only way you can get screwed is if you're tagged as underperforming. I've only known one person who's to ever receive that tag, and he was definitely underperforming.

>It would be interesting to see if you could meaningfully execute a company with total transparency but I don't think it would survive contact with reality.

Entire countries manage it. Sweden, Finland and Norway publish all income tax returns.

>>a move that gives them more flexibility to dial back that compensation if the economy turns sour.

That’s the only thing that makes sense. Asian economies learned this a while ago —but it leads to seasonal departures (after bonus distribution).

But yeah much easier to say bonuses will be reduced than to say salaries will get cut during lean times.

Lots of executive have “low” salaries in exchange for one off* bonuses :D

* though they do seem to get a lot of one offs...

Raises also compound if you get a raise year after year. A bonus probably won't increase each year.

This was a sticking spot to a recent negotiation I had. I fought for higher salary, but they added it into bonus.

> To add further, though salary cuts can be done by companies (this may vary across geographies), it's usually a little more cumbersome and also sends a different message to employees.

It's a lot more cumbersome, and will create a lot more friction and problems.

The key reason there's even a distinction between salary and bonus is that a salary is guaranteed as long as you work there, while the bonus is not.

OTOH, when the bonus has been paid out reliably for years, then the distinction gets pretty blurry. My company just cut bonuses this year for the first time in memory, by almost 40%. In the last two weeks we have had a half dozen new resignations per day. The company is profitable, they just set a target for year-over-year revenue gain that has not ever been met in the company's history, so that they'd have an excuse to pay less. And now everyone's pissed and the best folks are walking.

I am pretty sure it was deliberate, a way of cutting way back without having to give severance or make the news.

I'm in the same boat. We have measurements and the bar gets moved every year. Now we are at 150% profitability compared 2 years...and the bonus were nice. Now to get our regular size bonus we need to keep it up. In other words, the company makes more money than before, and pays less bonus.

Your CEO has a nice boat on order. The money has to come from somewhere :-)

> The company is profitable, they just set a target for year-over-year revenue gain that has not ever been met in the company's history, so that they'd have an excuse to pay less. And now everyone's pissed and the best folks are walking.

Doesn't sound like that "excuse" is working for them.

> I am pretty sure it was deliberate, a way of cutting way back without having to give severance or make the news.

It's the absolute worst way of doing layoffs. As you observed, the people walking out are the best performers who have great options elsewhere. Guess who stays?

Adverse selection in action.

Another aspect is that, depending on your jurisdiction, salary is used as the base for calculating unemployment pay, parental leave, pensions, severance, and similar.

As an employee, if you're given the choice between salary increase and bonus, the salary increase is worth way more in the long run.

Yeah, absolutely.