If I can't plan for the future with a determined salary then you don't deserve my skill set. Loyalty goes both ways.

"The Big Shift from Objective, Actual Compensation to Subjective, Hypothetical Compensation that Never Seems to Actually Happen." FTFY.

This is going to push several workers into unionization because while this might start out where employees are pushed to be more productive, this will become easily exploited with moving targets that become unrealistic.

On top of this, if you deploy such a measure poorly, you could easily create divisiveness in the workplace where employees sabotage each other to prevent one team or another from getting a bonus while subverting others to get their own bonus.

This is something we see in libertarian organizations that sounds good as an ideal but doesn't pan out and more than likely implodes.

If anything has taught me something it's that when companies have the option to do less to save money, they take it. So I would expect the salary you get to decrease slowly over time, due to "hard times" while executives rake in many multiples more than you do every year

The problem is multi-fold. The biggest one is that the metrics that determine the bonus pool and not directly influenced by most of the employees. The CEO of a company should have a direct bearing on the company's profitability, an IT technician not so much. Secondly the CEO can manipulate the figures to their advantage, something not possible for the ordinary employee. Thirdly, unless the bonusses are fixed percentages, the amount each employee gets is determined by some middle manager, who has every incentive to play favorites. I could go on, but why bother.

The theory that you pay higher performers more is obviously attractive; but(like so many implementations of the concept; most notably the incentives-to-short-term-stock-value-nonsense at the executive level) the perverse incentives seem like an overwhelming problem.

If there's even a bit of wiggle room in the metrics used to judge 'performance' the whole exercise basically becomes a salary negotiation but with extra steps, a veneer of objectivity, and a lowball default: when you can both assign someone a performance number and are on the hook for paying them based on their performance number your incentive is to just rank everyone as "you should be thanking me for not firing you" unless you are really afraid that they'll walk: which isn't really "bonus-based"; it's just how salaries work, except that now you are going through an insulting charade every time. Hooray.

If the bonuses are based on company performance rather than individual performance there's less room for just gaming the metrics; but the relative helplessness of any individual employee in determining the success or failure of a company of any nontrivial size makes those profoundly dispiriting unless they are actually pure 'bonus' on top of an acceptable salary: how is it going to encourage performance if you can do your job well or badly and your bonus is basically a coin toss based on broader economic conditions or whether consumers want red widgets but you make blue widgets or whether blue widgets are super popular this year?

The incentive was monetary targets.... The problem was that I valued delivering customer experience and relationships over taking them for every dollar I could. Probably why I now work in a large government funded organisation these days. In that previous job, clients would rather wait for me to become available than to have other techs come instead, and if I said they needed xyz they'd write a cheque there and then because of the trust built.

However, management only saw dollars generated and so thought I was underperfoming.

I think I only ever hit the target set for me once in the time I worked there. However, I had the happiest and most loyal customers. Go figure.

As with most things, this is good in theory and likely terrible in practice. This fixes a lot of the issues of people doing just enough to get by and counting on the people who are motivated to keep things going and actually getting things done. The issue is usually the performance metrics are built around the absolutely highest performers, meaning those who can't spend 60 hours a week working end up making less. Those people who come in and work hard but aren't willing to devote their life to the job end u

My company does this to avoid pay raises. Pay raises compound over time, bonuses don't. A big year end bonus makes you feel grateful, whereas a raise compounds over time and leads to a larger company pay out over time. Plus a company can claim they had a bad year and justify shorting you on the bonus. Don't put up with it.

I got forcibly switched from a wages + overtime model to a salary + performance bonus model around 2008. It's a scam. Your metrics will always be based on something you don't have direct control over, and they will always be "stretch goals," which is code for "almost impossible to meet." The only person who received performance bonuses there was the HR manager.

I left there two years later and went back to a wages + overtime model where 5 hours of overtime per week is expected during normal times (45 hours total). It's much better. When things are busy I don't mind working extra overtime and getting paid for it, and when things are slow the company can cut overtime to reduce costs without resorting immediately to layoffs. The only time the company had any layoffs in the last 15 years was for about 1 month at the beginning of COVID, and then everyone was brought back.

Many companies that are already doing this also wait until well into the next year to pay the previous year's bonuses in order to curtail turnover. So you are told what your bonus will be at your review, but you may need to wait 4 months or more to receive said bonus and you lose it if you quit before the bonus payout date -- because bonuses are not considered "earned".

Quite often the bonus-based portion of an employees compensation is only slightly determined by the individual's performance. It is mostly determined by factors largely beyond the employee's control - like performance of the company as a whole.

In this situation, the bonus-based portion is more of a tool by which the company can quickly make adjustments on cashflow - much more difficult to do with the fixed portion of the salary. But it does have to be advertised as part of a "reward for performance" culture

The truth is simple - businesses have found themselves in a crisis. The pandemic forced a lot of people to reconsider their working lives - far too many people were living to work, and working to live.

That lead to things like quiet quitting and other things where bosses used to dangle incentives to work harder - promotions, pay increases, and other things. Of course, that stuff never happens - things like "you want a pay increase? you have to change jobs" and promotions going to outside people rather than f

Rory Sutherland argues (paraphrasing somewhat) quite convincingly:

" [1]https://youtu.be/aRxq_E0SWzs [youtu.be] ...that individual performance metrics harm the company overall in the long term - drawing a parallel with the behaviour of bees, a proportion of whom ignore the figure-eight-dance of other bees. Conventional wisdom might be that because these bees are communicating the location of sources of nectar, 100% observance of suggestions to 'go this way' are to the collective advantage.

He postulates that the 20

[1] https://youtu.be/aRxq_E0SWzs

Like tips, bonuses are a way of downloading risk from a company to the employees. Studies have shown that beyond a certain, surprisingly low, threshold, financial incentives lose their power to motivate. At some point employees come to depend on them and they're effectively salary that an employer can pull out from under you at any time.

If you want productivity, set clear expectations, hire well, pay appropriately. Anything less and you may get a temporary boost but in the long run you're headed downhill with dropping moral and bleeding your best producers.

The basic capitalistic premise is that the capitalist who owns the production means hires the worker's time hence a "fixed" pay regardless how much profit the worker generates.

Is the pay becomes function of the productivity the "employee" becomes a business partner and the "employer" should no longer have a say in how the time is spent.

This can go even further: the worker should be able to re-negotiate his tariffs at any time, after all if his pay is based on performance rather than assiduity, then he might

"Employers argue this model boosts productivity, while some workers report earning less than expected"

The reason employers do this is to save money so of course earnings will be less than expected.

If I'm interviewing for a job, and there's a bonus potential, I don't even think about the bonus when deciding whether to accept the offer. The only part I look at is the salary part. The bonus is just gravy, if it happens. The thing about bonuses, is that they come and go, and companies can't resist constantly tweaking them to make them smaller. So if the fixed salary part is sufficient to meet my expectations, I'll consider the job. If I *must* have some or all of the bonus to make it work, the answer is no.

Bonuses are completely discretionary on the part of the business and as others have pointed out, can be easily gamed.

Just wondering if the captains of industry ever bothered to read up the lessons from the French Revolution.