If I Don't Get a Bonus, I Don't Want the Job

What, exactly, is compensation?

I know. I'm a contributor to a blog called Compensation Cafe. I should be telling you that, right?

But as the years go on, frankly, I get a bit more confused.

Many decades ago, compensation was "a day's pay for a day's work." Then in the mid-20th century, benefits including pensions, medical and insurance got added to the mix. Now, things that used to be bonuses, like ...erm... bonuses, are part of a "compensation package."

I get it. I understand this. What I don't understand is when a set "bonus" becomes an expected entitlement.

Like the situation described in this recent FINS article, which started out with:

"Deferred comp, clawbacks, restricted shares, this is the new currency of Wall Street. Employees, though, still prefer cash."

Indeed. That is perfectly clear to me. But then the article continues:

"So much so, that even in today's uncertain job market, some would turn down a position that didn't pay a cash bonus. In FINS' informal online survey, Sign or Decline, 50% of 781 respondents said they'd turn down their dream job if their bonus was paid entirely in restricted stock and subject to clawback provisions."

Sadly, this isn't really news. Earlier in the year, US brokers threatened to leave if their bonuses weren’t large enough: “For some on Wall Street, a less-than-stellar bonus is simply too much to bear. Brokerage executives at one Wall Street firm, Jefferies Group, have threatened to leave the company if their bonuses aren’t up to par with other firms."

I think I'd take people up on that offer. At least it would assure me of missing out on those who would sue, as bankers in the UK threatened a few months ago: “A number of ‘disgruntled’ bankers will not accept bonuses that are lower than usual, legal experts warned, according to the Daily Telegraph.”

Setting aside the sense of entitlement, what are we incenting in employees with this "compensation" structure? When a bonus becomes an expected part of the pay structure, employees may go to unintended - and undesired - lengths to secure that bonus. That's how we end up with ENRON situations.

I'd far rather see compensation return to a fair and just pay structure - "an honest day's pay for an honest's day's work" - and put bonus back where it belongs. Sure people deserve "a little extra" for going above and beyond, but that should be in the form of after-the-fact recognition and rewards that come as a surprise - not an expected entitlement.

The FINS article cited at the top of this post concluded this way:

"It all boils down to one thing: Bonuses aren't what they used to be. Unless the pay package would compromise your financial security, turning down a dream job because you're unhappy with the bonus structure may not be worth the risk."

I couldn't agree more. What about you? Do you think bonuses have gotten out of control in many cases? What approach would you prefer to see?

As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.

Comments

[Dan Walter]

Great post Derek,

The odd thing is that the "Bonus Entitlement Culture" is very unique to a couple of industries and regions. More interesting these industries and regions generally pay very well even when out take out the bonus.

Perhaps companies in these industries should just change the name of the bonus to "The Super Big Paycheck in Early Spring". It would be more honest and would stop the tarnishing of those companies who actually pay bonuses ONLY on merit and performance.

[E. James (Jim) Brennan]

The fact remains that the best predictor of this year's bonus is last year's bonus.

Besides, isn't there some law against reducing bonus amounts? It is supposed to increase every year, of course. In addition, since the employee is entitled to the automatic payment, there should be some regulation requiring the compensation boffin to disgorge it upon demand, right? This must be sorted out. After all, it is the responsibility of the remuneration person to enrich the employee, is it not? Of course.

;-) Ha!

[Derek Irvine, Globoforce]

Dan, great suggestion, indeed. That's what it amounts to - both in how the companies present the bonus as part of the comp package and how employees expect it and build it into their lifestyle.

Jim - that's what really gets me. The link I give to the story on bankers threatening to sue for their bonus -- really?