There is a lot to do about the bonus culture in the current business environment. Is it pure greed that is driving people when it comes to bonusses? When I reflect on my own career it is pretty simple. When I started in government service working for the tax authorities, salary was not a big thing, for me at least. You knew exactly what you would earn, because every payband was linked to a certain base pay. No bonus system. Then I moved to academia. When I was hired at the university I did not discuss salary at all. Actually, I was rewarded in a lower Payband then I was used to at the tax authorities. That didn't worry me at all. The first time money became important was when I started to work for a consultancy firm called Arthur Andersen. I could pick out a lease car and boy that was exciting. You do get greedy when you can choose a lease car. Everyone in that company was money and status driven. Having money meant being succesful.
The bonus became a fact of life when I made another career move. From consultancy to working as a tax director for a US multinational. I landed right in the middle of a bonus driven environment. Everything was linked to the bonus. If in the third quarter it looked like we would not hit our target at year end, everyone got nervous. The CEO implemented a travel ban and hire freeze straight away. If we missed the target there was a danger we would not receive the full bonus. But let's not forget one thing: in a US company bonusses are considered to be an integral part of the salary. Financial planning is done based on the yearly bonus. Mortgages are paid off by the bonus, contributions are made (tax free) to the pension plan.
What is the lesson to be learned? There are more important things than money, that's for sure. But when everyone around you is caught by the bonus fever, you will be infected by it as well. So get rid of the bonusses. Bonusses influence behaviour. If a sales rep is afraid he will not hit his target and therefore will not receive the full bonus he will do anything to hit the target. Making deals that are too risky, for example. Make sure people receive a fair market value salary. Performance based salary, a high performer should earn more then a low performer. Reward people by creating pleasant working circumstances. There are more ways to reward employees then by money alone.
