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« Really? | Main | Life on the Bell Curve »

February 15, 2012



Great comments, Dave and Ron. Thank you for the clarifications and intelligent perspectives.


I agree with you that coupling bonuses to a profit target is simplistic and rarely reflects truly "merited" compensation. But when you speak of "bonuses", you speak to a small elite. The vast majority of salaried or hourly wage earners have no experience with bonuses, and I'm pretty confident have little sympathy for the plight of the executive. They are relegated to hoping for the increasingly rare "raise", often termed "merit increase", which in the past decade has been non-existent or perhaps for the lucky, in the 2% range. This spawns not just low morale, but anger. The view looking up at the executive suite is "thems whats gots keeps" and the income gaps ever widen, which is one reason I view with some chagrin the attack on unions.

Ron in Alexandria, MN

I am familiar with the concepts of merit pay and bonuses - and am a fan of both. It the top people in the organization are receiving a bonus, I believe everyone in the company should as well. Likewise, in determining individual raises using merit (performance) is not inherently unsuitable or ineffective. But I am unfamiliar with the context and linkages with which you are using them - in fact as you describe their intertwinement - it sounds discombobulated, dangerous and rife with consequence imbalance. There is a profound difference between effort and results (both ways) especially during times where economic misfortune makes for tough business navigation. The law of compensation (AKA the law of prosperity) states that what we make, as a business and as individuals is in direct proportion to the quantity and quality of the services (output) we deliver. A high performer in a poorly performing business can hope for little more than surviving for another day, or a new job. A low performer should be challenged to elevate performance or find a new job, even in a wildly successful company. Finally, whatever people do with regards to compensation – remember the 3 B’s: Be fair, Be consistent, and Beware.

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