It’s that time again. Between scrambling to finish our holiday shopping, avoiding embarrassing ourselves at the office party, and planning our spring vacation – soon, friends, it’s coming soon – we’re busy seething over someone else’s year-end bonus. Don’t pretend you’re not – there’s always someone whose bonus seems underserved and overinflated. All of Wall Street, for example.
Since grumbling and/or crowing about year end bonuses is as venerable a tradition as the bonuses themselves, this week’s Friday Five is devoted to bonuses and the pitfalls therein.
This privately held energy company, helmed by by founder and self made billionaire Jeffery Hildebrand, has issued a $100,000 bonus to all of its employees as thanks for meeting a five-year goal to double the company’s size. Merry Christmas to Hilcorp! This isn’t the first time Hilcorp has been in the news for lavish across-the-board bonuses. In 2010 Hilcorp offered a choice of a $55,000 car or a $35,000 cash bonus. Not only is business booming for Hilcorp, but it consistently ranks highly in best workplaces and most diverse workplaces lists. Food for thought?
This is an interesting case. Jonathan Hoffman, a former Lehman trader now at Barclays, claims he was never paid a promised $83 million bonus for making the bank $700 million in profits. Lehman claims the bonus was paid by Barclays when he fist signed with them. The case has now become a roadblock in closing Lehman’s bankruptcy case. Most of us will never have to deal with bonus packages of this nature and size, but the mess is an object lesson in being careful about making and keeping promises.
Bonuses are great for the pocketbook. But how useful are they in motivating employees and building good relationships? Well… Ryan Frankel says, not very, and I’m inclined to agree. Free food and flex time consistently rank as a top work perks, and both are, financially speaking, minor rewards. What makes them so popular is the feeling they convey, of attention, consideration and care. Bonuses, especially once they’ve become expected perks, don’t do that.
It’s always time to re-think year-end bonuses – don’t you think? But Daniel Kehrer has four good reasons for you to re-think your bonus program, and they all come down to effectiveness. Sure bonuses are nice, but do they help you retain employees? Do they strengthen relationships? Improve performance? Well, no, they don’t. On the other hand, bonuses are just nice. And if your goal is simply to be nice, they do that pretty effectively. With that said, if bonuses are the industry standard, you’ll have to get creative should you decided to eliminate them.
Save, save, save. Main St. predicts that most of us – around 78% of full time employees – can look forward to an end-of-year bonus. The size of it, though, varies wildly. Some employees will see bonuses that represent a significant portion of their earnings while others will get a gift card to a steakhouse. (When I was working in retail, I once got a thank you card and a $25 Starbucks card. Believe me, I savoured my bonus coffees.) But a bonus is a bonus and the question is, what will you do with yours? Main St.’s advice? Save it. Save as much of it as you can.