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RE: Why salary bonus and other incentives fail to meet their objectives

21 replies on 2 pages. Most recent reply: May 31, 2004 8:53 AM by Prince Chellarajan

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Mike Spille

Posts: 25
Nickname: mspille
Registered: Nov, 2002

Re: RE: Why salary bonus and other incentives fail to meet their objectives Posted: May 19, 2004 9:11 AM
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>
> One thing that I've learned is that when a person is
> having their world view challenged they will often times
> react angrily like Mike has. Something about my article
> has put Mike into a position where he feels he has to
> protect himself.
>

I'm really curious now - what exactly am I protecting myself from?

As for angry - sorry, I'm not angry.


>
> Accepting a position based on compensation, work
> environment, or whatever other factors are important to
> the individual, empowers that person because they
> completely own that choice.
>

Agreed.

> Accepting a position is a negotiation between equals.
> Performance bonuses and appraisals are edicts from on
> n high.

Dale, many of your posts on this topic start out well, but then always seem to end on this sort of subject. If I may grossly and outrageously paraphrase, what you're saying is "The Man is out to control us and enslave us". When you say "Performance bonuses and appraisals are edicts from on high" it reads just like "The Man is sticking it to us".

Performance bonuses, reviews - these are not "edicts". It's part of employee/employer interaction. It most often involves your direct boss. Now, it's interesting - you say in your posts what good managers should do, a whole list of things they should do to make their teams better (a list I mostly agree with, actually). Let me put this to you - if your boss is capable of doing all this, why is your boss suddenly incapable of determining the right bonuses for people? He's capable of managing one of the toughest groups in the world to manage - software developers - yet he's suddenly a faceless (and apparently up to no good) part of the system handing you "edicts" from on high.

In your own entry, you say that you do things like get estimates from people and hold them responsible for the results. You can do this, but you can't determine performance bonuses? You can keep on top of a project to keep it going and make it successful, but you can't determine bonuses based on performance? Why?

Mike Spille

Posts: 25
Nickname: mspille
Registered: Nov, 2002

Re: RE: Why salary bonus and other incentives fail to meet their objectives Posted: May 19, 2004 9:31 AM
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>
> Salary, flexible hours, location (whatever) are not a
> rewards. I will take these things and in exchange I will
> give forth my time and effort.
>

These things usually are, in fact, a reward, at least in practice. For example, better people (for some definition of "better") tend to have higher salaries. If salaries weren't rewards, then people in the same rough job would have the same salaries.

> > part of the discussion" - actually, it is. Salary, and
> > the larger idea of "compensation" is a large portion of
> > Dale's arguments - and of people's jobs.
>
> Not once have I mentioned "compensation". I have focused
> solely on merit bonuses and appraisals.
>

You have used a number of terms which you may not call "compensation", but I certainly would. The term can be a little slippery, but I don't think you own the definition :-)

I personally think that compensation, in its totality, is at the heart of the issue you're talking about. You are arguing for fixed compensation, I am arguing for flexible contribution where an employee shares a greater measure of risk, and in return get potentially receiver greater rewards.

> >
> > You say "Dale discussed merit based bonuses. When I?m
> > working on a project I don?t second-guess my actions by
> > trying to evaluate whether my merit bonus rating will
> be
> > positively or negatively influenced". Bonuses don't
> work
> > that way. You don't think every minute of every day
>
> It's a good thing that you are so self-aware of how
> bonuses affect you, however, I'm not buying it. The use
> of "you" in this last sentence indicates that you are
> projecting your own perceptions onto the reader.
>

Yes, there was some projection there - I was summarizing what it's like to actually work in an environment like mine that had a very successful bonus system. The "you" meant "people in this sort of environment don't think about bonuses every minute of the day".

I've worked in that sort of environment, and I'm talking about my experiences working there and what it was like. It's injecting a real life example into the discussion. It sounds like you object to this for some reason I can't quite work out.

Have you ever worked in an environment like I described? If so, I'd like to hear about it.

> Again, I can point to the evidence: people put significant
> effort into getting the carrot and avoiding the stick.
> Unfortunately, you've dismissed the evidence as being in
> n the minority because of some anonymous reviewer who,
> like you, also disagrees with the conclusions of the book.
> I'm also assuming that you've read the book and are not
> t just taking the reviewer's word (or mine) at face
> value.
>

Dale, you haven't pointed to any evidence in the above. You made a statement, you did not provide evidence.

I can't come out and say that the book is wrong, as I'm hardly an expert in the field. My opinion is that it is in fact wrong, and I pointed out that there is lots of literature that contradicts it. If you disagree, tell me specifically why you think the majority is wrong. Don't just tell me it's wrong - cite the contradicting positions and show where their research was flawed.

> Ok, here's the challenge to you: stop the rhetoric and
> produce that majority evidence.
>

Actually, the negative reviewer has already done the job for me. He cites several references that refute the book you keep referring to, and suggests a book with an alternative viewpoint that's suitable for laymen.

> I am completely flabbergasted by your insistence that
> removing power plays and focusing on treating people with
> dignity and respect is flawed.

I never said that. What I said is that you need both dignity and respect _and_ proper rewards. I did not remove dignity and respect and various psychological motivations - I completely agree with your statements there. I just said removing rewards is a mistake.

You may believe that you can't have dignity and respect w/ something like a perfomance based bonus. Well, in my experience you're wrong - I've worked for companies that achieved what you seem to believe is unachievable. I have also worked for companies with zero risk/zero reward that you are espousing - and I was personally miserable there. In my experience, lack of rewards breeds mediocrity and disinterested employees.

Sorry if this flabbergasts you, but it's my honest experiences. In all candor, what _you_ describe sounds to me like a hippie commune, and I'm pretty surprised that a software professional would suggest it as a model for treating employees and running a company.

Jonathan Dodds

Posts: 464
Nickname: jrdodds
Registered: Mar, 2004

Re: RE: Why salary bonus and other incentives fail to meet their objectives Posted: May 19, 2004 11:30 AM
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> > One thing that I've learned is that when a person is
> > having their world view challenged they will often
> times
> > react angrily like Mike has. Something about my
> article
> > has put Mike into a position where he feels he has to
> > protect himself.
>
> In what way was Mike's reply angry or an attempt to
> 'protect himself' and from what? It looked to me like a
> humourous response. I can't see any him making any
> personal comments about the motives or emotions of the
> person he was responding to.
>
> Vince.

I didn't perceive Mike's comments as very 'humourous'. I perceived his comments as mocking and ad hominem.

His later follw-up post however, was much more thoughful and considered. It gives me an understanding of his viewpoint rather than largely just conveying that he disagrees with my viewpoint.

Jonathan Dodds

Posts: 464
Nickname: jrdodds
Registered: Mar, 2004

Re: RE: Why salary bonus and other incentives fail to meet their objectives Posted: May 19, 2004 6:55 PM
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> Sorry if this flabbergasts you, but it's my honest
> experiences. In all candor, what _you_ describe sounds to
> me like a hippie commune, and I'm pretty surprised that a
> software professional would suggest it as a model for
> treating employees and running a company.

Wow. Mike, did you stereotype me as a hippie? Is that why you suggested I would work for free? I think I'm more insulted now than I was before.


Our experiences with bonus systems (or at least the lessons learned) have been markedly different. I have seen software projects derailed by individuals who put their self interest ahead of the team and business goals. In those cases perhaps the bonus system was flawed by effectively emphasizing something other than the output goals.

Mike Spille

Posts: 25
Nickname: mspille
Registered: Nov, 2002

Re: RE: Why salary bonus and other incentives fail to meet their objectives Posted: May 19, 2004 7:15 PM
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>
> Wow. Mike, did you stereotype me as a hippie? Is that why
> you suggested I would work for free? I think I'm more
> insulted now than I was before.
>

No :-) My comments were directed at Dale's overall comments on this subject, not your own.

If you have the time and inclination, re-read everything Dale's posted on this subject and keep "hippie culture" in the back of your head. If you're really negatively minded, you might also use the word "communism" (ack, I said it).

>
> Our experiences with bonus systems (or at least the
> lessons learned) have been markedly different. I have seen
> software projects derailed by individuals who put their
> self interest ahead of the team and business goals. In
> those cases perhaps the bonus system was flawed by
> effectively emphasizing something other than the output
> goals.


OK, here's the question related to what you're saying: for what do you get a bonus? What is the bonus evaluated on? Who determines your bonus?

The answers to this will tell you whether it's a good system or a bad one.

What you describe - people put their "self interest ahead of the team and business goals" - implies a bad bonus system. It's simple, look at it this way: if they put themselves ahead of the team and business goals, why should they get a good bonus? Imagine you lead a team and you control a bonus pool. Ignore Dale completely for a moment and embrace rewards for a moment. Who will you reward?

Now, tie this into Dale's ideas. If a manager can do everything Dale asked - why can't that manager decide fair bonuses? What's being argued against here - reward systems, or bad management? I think there's alot of confusion between the two, in particular people see bad management misusing and abusing bonsus systems and making a wild leap and assuming that bonuses are the problem.

Filip

Posts: 2
Nickname: filip1
Registered: May, 2004

Re: RE: Why salary bonus and other incentives fail to meet their objectives Posted: May 20, 2004 2:18 AM
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Hi,
I'm coming from another part of the world (former communist countries) and I will add a few points from my perspective.

>
> You say "Dale discussed merit based bonuses. When I?m
> working on a project I don?t second-guess my actions by
> trying to evaluate whether my merit bonus rating will be
> positively or negatively influenced". Bonuses don't work
> that way. You don't think every minute of every day
> "workin' for the bonus, workin' for the bonus". It
> becomes part of the background of working. It's part of
> your contract (written or not) with your employer.

I agree. Bonus isn't something that will keep me satisfied for a long time, but I will feel stupid if I don't get financially rewarded for my work. Also it's nice that Dale can get rid of the people that doesn't think like him, but that's not always the case. Your team is often created by someone else and you have to work with people assigned to you.


>
> Now, it is interesting when you say "Being the go-to guy
> for my team for a particular problem domain is more
> rewarding to me than being singled out for praise by a
> high ranking executive who has little understanding of
> what I actually do". That tells me that you haven't
> worked in a company with a good bonus structure. When I
> worked at Bear Stearns, I unfortunately got out just as
> the market started recovering and going into boom in '97.
> Putting that aside, the prior year I got a decent bonus
> s for the times and my effort - it was about $30K. This
> amount was not determined by "a high ranking executive who
> has little understanding of what I actually do". This
> amount was secured by my direct boss. It had to be
> approved by higher ups, but he made a convincing case for
> it.

I'm in the same situation and it works perfectly fine for me.
Also it's nice to to put your personal satisfaction in first place when you have solved all your basic financial and real life problems.

>
> This kind of bonus, and it's not pariticularly high, is
> the type of bonus you can get in certain environments. I
> got it because I did my job very well, and my boss
> respected me and my abilities and contribution enough to
> go get that bonus for me. And as you can guess, a $30K
> bonus can make an astounding difference in your life, in
> particularly when you already make a very good salary.
>
> This is what I'm talking about - real bonuses given by
> managers on the front line. _And_ coupled with respect
> and motivation and cooperation that Dale talks about -
> _and_ not being afraid to give someone a $100 bonus and
> not being afraid to tell them they were lucky to get
> that.
>
> So I'll ask you - do you want to work for Dale's manager
> that has all these warm fuzzies and good team dynamics, or
> do you want to work for my old manager who had exactly the
> same qualities - and who could also get you a wheelbarrow
> full of money at the end of the year?

That's out of the question. Unless you despise money. Donkey and a man are smarter than a man.
In former system I could work 12 hours per day and I would earn same amount of money as employees that work seven hours a day. After a while I felt so stupid that I started working for seven hours, and I worked on my own(non-commercial) projects after that.

And a conclusion:
As usual the truth is always in between. I've been lucky and had bosses that respected me and my work. Maybe that is the reason that I take that respect for granted, and look at the bonus money as something more important.
On the other side I think that proportion between people salaries can't be so drastic as proportion between ammount of work people do. So bonuses come in to fix this proportion.


Filip

Prince Chellarajan

Posts: 1
Nickname: javaprince
Registered: May, 2004

Re: RE: Why salary bonus and other incentives fail to meet their objectives Posted: May 31, 2004 8:53 AM
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I think it's a double edged sword. If you use it properly it will yield you the best result. Otherwise it may end up in failure. How bonus and incentives are measured in organization for each individual? What scale you use to evaluate a person for these incentives. Most of the time, the individuals are disappointed or discouraged when their performance are neglected or underestimated by inexperienced managers. Also some managers prefer certain individuals (some personal relationship) rather others which will also give a adverse result. Some good ways to utilize these incentives are to set an unbiased standard to measure each individual, hire experienced managers and eliminate employees with bad attitude. Rather hiding the evaluation from individuals, show how they are evaluated, their strength and weakness. This will help the individual to know where they are in the group and how to improve to get a better score and incentives.

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