New study questions how bonuses affect performance

[BusinessTech]

New study questions how bonuses affect performance

A Swedish bank may be about to change perceptions of how bonuses affect performance.

 

[Johnatan56]

I see profit sharing mentioned in the article, that would fill the gap of bonuses and would probably be better than bonuses as it gives a direct incentive based on market conditions and allows for people to care about longer term goals.

 

[lucifir]

I also like the fact that the profit share is only paid out at 60, so this will help with the execs that aim for short term profits at the expense of the long term sustainability of the company

 

[cguy]

I see profit sharing mentioned in the article, that would fill the gap of bonuses and would probably be better than bonuses as it gives a direct incentive based on market conditions and allows for people to care about longer term goals.

A bonus is usually essentially profit sharing - the difference usually being, that a bonus can go much higher or down to zero based on personal performance or lack thereof. We had this to some extent at my previous company - it really wasn’t much of a motivator - simply too little, since it is so evenly spread. Right now, where I am, the success of the company sets the size of the bonus pool and personal performance sets one’s share of it.

I also like the fact that the profit share is only paid out at 60, so this will help with the execs that aim for short term profits at the expense of the long term sustainability of the company

For those with the power to actually affect long term sustainability, things like deferments and clawbacks, are the way to go. Also, correctly compensating those who do the oversight is also something that should really be in place.

Personally, I just wouldn’t work at a firm that paid me out when I’m 60 or allocated performance bonuses in a way not related directly to performance. The level of profit sharing is often related to management level, and management level is often related to time in the company. These are all indirectly related to performance, but in my experience, most of the time these executives hit a certain career point and then just sit back and go along for the ride.