10 Things You Need to Tell Your Employees About This Year’s Bonus

Posted on Friday, November 14, 2008 by Frank Roche

Bonus season will be upon us soon, and for many there is going to be a lump of coal in their stocking. With that in mind, what do you say to your employees who expected economic exhilaration and burgeoning bonuses to go on forever in some kind of perpetual motion machine? How do you let them know what goes up, must come down? How do you say buh-bye to entitlement?

Here are 10 Things You Need to Tell Your Employees About This Year’s Bonus.

  1. Pay-for-performance still works: Better talent gets more money.
  2. Variable pay means that your bonus can go up in good years and down in bad years.
  3. The size of our bonus pool depends on our company profitability. This year: Meh.
  4. Our base pay is still targeted at the median. You’re getting paid fairly.
  5. We plan to be around for a long time. We hope you will be with us when our profitability goes ballistic.
  6. Now is not the time to sandbag for next year. Being profitable takes sustained effort.
  7. There’s no hidden money; there’s no slush fund that someone else got.
  8. Executives didn’t get all the money. In fact, bonuses are a larger fraction of their target pay, so they’re affected even more when the bonus pool is reduced.
  9. We’re all in this together, and we’re all going to get out of this economic slump together.
  10. We still love you.

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User Comments

  1. blackmailismylife

    Nov 14th, 2008

    Insert choice lines from National Lampoon's Christmas Vacation here.

  2. lruettimann

    Nov 14th, 2008

    There’s no hidden money; there’s no slush fund that someone else got.

    I can't tell you how many times that slush fund has been referenced in my discussions with employees. Many don't trust that their executive management team is also paid for performance.

  3. Ron Ulrici

    Nov 14th, 2008

    You bring up the downsides of Bonus Programs. They only work when times are good and then they don't work as a motivator, just as an expensive “thank-you.”
    Even when employees know that the company is hurting, they still expect their bonuses.

  4. Jason Seiden

    Nov 16th, 2008

    Good to know I'm giving good advice… or at least, I'm not the only one giving *this* advice.

    I find mgmt often has a tough time communicating #1. There is a fear of acknowledging that some people work better than others… Ironically, I don't often see lasting negative effects at the employee level. Since school—when GPAs were openly published—they've learned to deal with forced rankings. Even many of the Gen Ys I work with who didn't get that stuff in school CRAVE honest feedback in the workplace.

    So managers, the faster you can develop the courage to tell it like it is, the more trust you'll engender and the easier it'll be to manage through the tough times.

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