Hacker News Reader

Comment by jknz | Hacker News Reader

This may be a short-sighted policy for the employer.

Once-in-a-year bonuses give very little incentive to produce efficient work day-to-day. Because bonuses are given far in the future, employees have little to no rapid feedback on their work; and being far in the future some employees simply forget about them (or believe they might change jobs before bonuses are given so why work hard anyway).

Giving weekly or monthly bonus would give a rapid a powerful feedback to employees; and bonuses would be much connected to actual work than the corporate politics that happen just before the yearly bonus.

Another thing that employers risk with this policy is employees leaving en-masse as soon as the bonus is given. Some consulting/audit companies give bonus after the summer, just before their busy season starts; and employers learn the hard way that giving the bonus as late as possible is not as smart as it first sounded.

View on HN

It's not short sighted.

In finance it used to be the norm and is largely moving back that way.

Using it as a lever for employee performance is a secondary effect (that can be done just as effectively with salary). Primarily it allows the firm to manage comp costs to be in line with the firm's performance. During a downturn it allows you to cut comp by like 25% without reducing headcount. The possibility of employees leaving en masse is certainly considered but it's not very common.

I should have added that it only applies to some companies.

Finance is a special case because if a lot of traders leave at the same time, the ones who stay will have more capital to play with.

Consulting/contracting/auditing firms are very different: they are committed to specific projects for specific clients and have already negotiated the fees. So it's real trouble if employees leave all at once--you cannot simply move their projects/clients to the employees who stay (because it creates even more overworked employees who will leave asap after the next bonus).

Also these projects may be much shorter than a year, some audit works are done within one-two weeks. If the firm negotiated a 2 weeks project for $XX fees and the employees on that project manage to finish the project for far less resources, the firm knows that they made a huge profit on that project. The firm may give these employees an instant bonus so that the employees are incentivised to reiterate the performance for the next project.

Very common for software developer working in Asian countries. As soon as the end of year bonus is given out they can walk into their office the next day and everyone has resigned and moved onto another company with all your IPO and business knowledge.

Or in finance

Getting 20 dollars extra a week doesn't feel worth it vs 1000 dollars at Christmas

You can put it into a saving account and it'll grow by Christmas.

The counterpoint is that the "bonus" amount seems larger when given as a single payment, and doubly so since most people only budget against their paycheck. Add in the end of year holiday season and it's very effective.

In some countries (or individual companies) this is done in another way - the annual salary is split into 13 or 14 parts, and the 13th is given around Christmas period and 14th around summer holidays.

But it's not considered bonus, it's considered part of the salary and it's guaranteed.

Reply on news.ycombinator.com