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Comment by duxup | Hacker News Reader

I worked at a company where a yearly bonus structure was conceived of by a team in HR who were IMO bad with numbers. Many emails went out about how it worked and so on.

One year we got $300 (or less...) bonuses. It was just how the math of this complicated system worked out.

A lot of feedback was given about that program and it wasn't positive. They came back to a few of us asking us to elaborate. I told them "I once got a $300 bonus working at Little Caesars (American pizza chain) for selling the most crazy bread in a month."

They finally got the hint and canceled the entire thing, it was better not to have it at all IMO, more demoralizing having it around. $300 is better than nothing, except when it sends the wrong message.

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Companies really, really want their employees to perform specific behaviors that they desire, except they don't want to compensate them extra.

In truth, a base pay + bonus structure that is commensurate with the outcomes the company desires is the best solution.

Leaders shouldn't trust folks who go into HR to come up with these.

Companies are also really good at coming up with values and creating bonus structures that incentivize going against those values. Most companies like to say they value teamwork and collaboration, but also give out individual awards to people who do the most visible work while ignoring the contributions of the 100 other people that made a project succeed. Nothing kills morale faster than giving awards and bonuses to the manager that forced massive overtime to complete a project, and giving the team a pizza party.

Yea I experienced that from the customer side. I purchased a car, the sales person wanted me to submit a survey on how she did. When I got the link for the survey, it was to rate how their department was, and it was attached to their manager. I found out later the employees get $100 per review, but we are not rating them, we are rating the manager, they get no recognition. I'm not going to support systems where the managers get all the credit and the employees get nothing but $100 per customer as an incentive to make the manager look good..

My last job had a bonus structure of “everyone gets $X each year, as a percentage of yearly profit, based on time worked at the company up to a year”. On average my bonus was about $8k - no strings, no requirements. If you started that year, your bonus was prorated.

My current position is merit-based - over the year you have several goals you set with your manager like learning something new and presenting it to the team, attending a trade conference, etc. Yearly bonus is x% of around $15k, and that % is based on how many of those goals you accomplished.

Both systems feel tangible, and the rewards feel like they’re worth it. The former being completely without any requirement was really nice, and also I don’t mind having self-improvement and professional learning goals to work towards for a sizable bonus.

Yup, and in this case a lot of the numbers that went into the math were department wide macro numbers. I could do amazing at my job, the numbers wouldn't change, I could do nothing, the numbers wouldn't change... and it was a mystery/ a core to get a feel for how the math would work out. That opaqueness was an issue too.

Better to just do a low amount of profit sharing - if we all win you win, if we all lose you get nothing; its way less stupid than saying "well you are being dinged for our failure on X thing" when they had no ability to impact it and often times that's not even tied to profitability.

Yeah I worked at a place that did that. Company hits X,Y,Z numbers and everyone got what was equivalent to a paycheck as a bonus. A number that seemed to scale well and people cared about / appreciated.

The times we hit two or three pay checks were great.

That's most of the point of the employee-employer relationship. The company pays a flat rate and tries to maximize output reaping the extra output of over-achievers. In return the employee is relatively insulated from business risk (well except for layoffs to juice the stock price).

If you can be fired at any point then how exactly are you insulated from the business risk? You are only insulated from the upsides such as record profits etc. All the downsides are still there.

Compared to freelancing. If you're an independent contractor you have to market yourself, close deals, manage client relations, and of course do the actual individual contributor work. You have to convert a stream of individually unreliable prospects into a steady income.

There's plenty of firms that run at a loss from time to time but don't immediately cut jobs or pay.

> One year we got $300 (or less...) bonuses. It was just how the math of this complicated system worked out.

I worked at a company where HR had too many people coming up with complicated reward schemes, but not enough money to make them worthwhile. Same thing: Reward levels were $100 here, $200 there, and required a relatively large amount of work to get.

The weirdest thing was watching a subset of people pursue these small rewards so aggressively that their primary work started to fall behind. Some people would be grinding away at the next step to win a $100 reward while neglecting real work that others were depending on.

Good lesson in how weird incentives can be for some people.

I'm reminded of an experience a friend of mine had while shopping at an Old Navy. She stepped in a pile of human feces that was in the middle of the aisle. For her trouble, the store gave her a $5 gift card.

Her dad taught a business class at a local college and for years thereafter used it as an example of how giving a small amount of money can be worse than doing nothing at all.

> They finally got the hint and canceled the entire thing, it was better not to have it at all IMO, more demoralizing having it around. $300 is better than nothing, except when it sends the wrong message.

I wish more companies realized this.

It's a lot better to just not dangle rewards if you don't make it worth their while.

A day off or a healthy bonuses is a lot cheaper than screwing up the morale of a team or person which results in them leaving or cutting productivity because they know your 'carrots' aren't worth it.

What if it was a $150 gift certificate for a nice restaurant?

Strangely, that somehow seems more valuable.

Ugh, this brings back (bad) memories of my first job out of college. I remember some of the engineers who really put in a lot of extra time -- like, we're talking plenty of 60+ hour weeks for months on-end to get projects done for various customers. These customers' contracts were easily in the seven-figures (USD), sometimes eight-figures. In at least one quarterly meeting, the CEO & some VPs were thanking these engineers for their efforts... With $50 gift cards to Starbucks or wherever.

From a purely logical, objective measure, this is good - these engineers received extra compensation. But I think most people saw it as a huge slap in the face. Probably hundreds of hours of extra work compensated by an "atta-boy" and a gift card worth a few coffees and scones; in exchange, the owners of the company reaped huge monetary rewards.

Or better yet - $150 gift certificate tailored to the employee's interests. For example, if Tom likes to golf, find out where he likes to play and get a gift card there. And give him an afternoon (or better yet, whole day) off to play golf - and don't count that as PTO. The small personalization means a lot, at least in my experience.

Better yet the CEO could puckerup and kiss my bhole with tongue and it won't cost a thing.

What prompted you to write such a strange comment?

https://en.wikipedia.org/wiki/Overjustification_effect

Yeah, those numbers are so far down into chump change they're more like a slap in the face than a reward. But hey, if your name is on the patent, it's on the patent forever. It may not give you any money at your current job, but it might help in salary negotiation at your next job.

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