It's both a carrot and a stick for the company over the employee.

If that is the reason you pay a bonus, then you already lost. People will just do the minimum required to achieve he bonus requirements and will not keep the companies interest in mind. I’ve seen places where people prioritized stuff that was no longer in the companies interest, but made them eligible for a bonus.

You could just as well fold the bonus into the fixed salary and be better off in most cases.

Well, you can pretend that employment is not a tit for tat scenario... but it is. even with a flat salary, you do what I want, and I might give you a raise. You don't do what I want, and I might fire you. There is really no getting around that.

Now, the discussion here is "should we maximize or minimize those tit for tat aspects of the employee/employer relationship"

>With the semi-random schedule there is the additional risk that the employee completed something they thought was a big deal, but you didn't or didn't even know about it. Disappointment by not acting on something you weren't aware of.

This seems like a very important concern that any bonus system would have to account for in order to be successful.

One way to approach it is to tie the bonuses to company revenue, which is easily measured, and in a company this small, fairly easily moved by even one person. (now as we add more people, it might work less well, as one person might feel like they are carrying other less productive employees... but right now, it's me, the owner, and one full-time employee, so I don't think I'd have those problems.)

I think tying it to total company revenue performance (maybe with a random multiplier or on unpredictable dates? that would be the manipulative part that may or may not be insulting and bad.) would mitigate a lot of the problems you mention of feeling jilted... I mean, you can argue about how hard you worked, or about how brilliant you are, but you can't argue about how much money came in.

Not just morale, even when things go well it can be a disaster. My wife's company just paid out a massive bonus and 5 people, nearly all of the people in this one small department, quit.

You're right. They're going to pay themselves the bonus regardless of this debacle.

So much about how terrible things are in general can be tied back to this one simple concept.

If the Goose needs a few more days to lay the golden egg should you reduce it's food budget?

Seems kind of short sighted to punish your high performers. I can think of multiple times this happened in my career.

> I am not fully sold on the idea of him losing a bonus is 100% because he defended the person who did it.

He seems to say in the video that part of it was not fingering who did the bug and the other was that his boss wanted someone else's bonus to be higher so he removed some of Tim's bonus.

There's nothing wrong with collective bonuses. I just don't see them as a boost for productivity. It's a nice perk. I probably overstated their negative effect. You're not going to not do 'nothing' since your team will know if you're not pulling your weight, and social pressure plus threat of being fired will keep people in line. But yeah, generally collective rewards just don't work as expected, else communism would work.

I think more jobs should be structured this way

BUT

it also needs strong checks to catch and _fire_ folks who upsell/ oversell/ overcharge against the customers' interests.

This is a risk with any quota (minimum) system but there are a relative handful of folks who will abuse a reward structure to the maximum potential, raking in tons of money for the company (and themselves) while slowly damaging the reputation of the company.

So, we need good incentives and rewards coupled with harsh penalties for dishonesty and abuse. IME, companies are often much better at the former than the latter.

That's an appealing theory, but the only evidence produced to date that compares the performance of folks who got long-term compensation with those who got short-term shows that the firms that used short-term compensation did better than the ones that used long-term compensation.

http://causesofthecrisis.blogspot.com/2009/09/three-myths-ab...

Yes, that is my point.

If I get paid more if your project fails because there is more budged for my project. My motivation is against collaboration.

I do it for the money. And the company, thru forcing me to compete with my colleagues for budged, and bonuses, gives me an incentive to not help, or in the worse case scenario, to sabotage their work.

And managers cannot do much about it if there is a strong economic incentive to be hostile to your colleagues.

No, it really doesn't. At most, this represents a one-time-only bump in disposable income, which you either spend to meet your immediate needs, save it up, or blowin up on whatever tickles your fancy.

A one-time bump in disposable income does not change anyone's drive, determination, or professionalism.

If that assertion had any bearing on reality, all companies which hand out hiring bonuses to new hires or pay any sort of bonus would be seeing determined workers turning into slackers overnight, which makes absolutely no sense at all.

While bonuses can help, expecting them to prevent resentment is, in my opinion, misguided.

That’s employee hostile. Effectively you’re creating a system where compensation is based on your ability to “engineer” placement on a hot team/product.

Ultimately it’s bad for a company as you’re signaling that political savvy is valued above skill, and less directly profitable teams become ghettos.

That works only if the company is small, otherwise the worker's compensation isn't really tied to the success. And once the direct link is broken all you have is KPIs.

Isn't another solution to make perks not variable, and clearly outlined in the contract as part of the employment package? You only have to worry about what your employees will do if you take away a perk when it's actually something you can consider taking away. If you treat it as part of the guaranteed compensation, you'll budget for it accordingly just like your employees do.

If you want to give bonuses, like the parent said make it a flat guaranteed amount, or tie it to a number based on company performance that people can see and make plans for (profit sharing with published numbers at regular intervals, preferably more often than it's paid out).

It is incredibly hard. So there are two approaches - the sales quota style targets, and the shared equity.

I think the shared equity works - but that interestingly places a hard limit on the number of employees - shared equity gains need to be a meaningful amount of money. In other words, if you paid out all your profits to your employees equally, how many employees would you actually want to have? Would they want to hire anyone else?

Is this a new Coasian limit?

i don't understand how people don't get it: if this were a malfunctioning system companies' margins/bottom lines would be affected and they would correct course. the fact that not only does this trend persist but grows signals that it's actually effective.

The problem with this is, as they say, that if you pay peanuts, you get monkeys.

Running a successful broadcaster is hard, and there's a limited pool of talent that can do this well.

So if you want to be successful, and not a public-money-wasting amateur-hour operation, you need to attract experienced professional talent. And if you aren't competitive on salary, why would they come to you?

I understand the spirit of your idea though.. Maybe bonuses should be based on specific metrics - like viewership or fundraising - that and publicly tracked and paid out in a very transparent way instead?

And maybe they shouldn't be only for executives.

Ad-free is a tough one, but maybe they have limited categories for advertisements, say things that are of public interest like events? Not sure...