A DAY & ZIMMERMANN COMPANY

Semi-annual bonuses: Keeping up with the Jones (or the Harmans)

Share:  Share on Twitter Share on LinkedIn Share on Google Plus Share on Facebook

Posted by Matt Rivera

Find me on:

March 16, 2010

It was recently reported in The Wall Street Journal that companies like high-end audio manufacturer Harman International Industries, have started paying semi-annual bonuses to employees and executives as a retention and motivation tool. The thinking is that waiting all year, or having one quarter kill the whole year, and not getting a bonus is demotivating. Other companies are apparently following suit.

But what if that's not an option? And is it even a good idea? For many companies, changing the compensation plan or making some sort of short-term modification is fraught with danger. Some companies simply can't afford it. In addition, from an HR perspective, it immediately turns the conversation to money, rather than environment, benefits or organizational fit.

My personal belief is that most employees might see this as a way for executives to get paid more quickly, but in our current economic situation, the pressure is on to find a way to get the bottom-line back into the black. For some, this might seem like a way to create some type of short-term motivation, but to me, it has a subtle hint of desperation.

In any case, before you decide to make a change like this, or when someone else makes the suggestion, here are a few things to think about.


  • Be honest with employees. Making quick, short-term changes to compensation can seem attractive, but it may communicate desperation or a change in your brand. If it is indeed short-term, make sure it's clear, and aimed at a clear, immediate goal of improvement. Don't sell it as a substitute for long-term performance, or a "new, improved" compensation plan.

  • Keep imparting the long-term vision. Don't forget how short-term changes can affect long-term plans. Keep infusing your company with reminders of the long-term goals and strategies that make you successful. Yes, it's great to get money sooner, but it's better to have a growing company with opportunities for its employees.

  • Stay competitive with salaries and benefits. As we've all seen in the papers, bonuses can be a double-edged sword. And in reality, there really is no equality in this area because not everyone is eligible and goals can vary. The best insurance is to make sure you are competitive with overall compensation within your marketplace.

  • Remind executives of your employment brand. Does such a change impact your employment brand? Absolutely. Not to say it couldn't be a positive change, but if you've put a lot into creating a good workplace, a change like this could tilt the balance back to compensation. Can you, or do you, really want to compete on the basis of your bonus plan?






My guess is that most of the companies on the various "Best Places to Work" lists won't rush to implement this type of program. If they've created a solid brand and long-term prosperity, they likely don't need it.

For the rest, I would urge caution. Shortening the time for these types of payouts is likely to shorten a lot of things--short-term profits, short-term employees, short-term companies...










Topics: HR Strategies

Hiring Managers Guide to IT Staffing

SUBSCRIBE

Get bleeding-edge content delivered right to your door, or to your inbox.  Sign up, it's that easy.

Search the Blog