Earlier this week I had a meeting with some of my fellow executives in which we discussed awarding bonuses to company employees for achieving important company milestones. We started to argue about how such bonuses should be paid. Should they be awarded to those individuals who truly did an amazing job and performed above and beyond the call of duty? Should they be distributed equally among the entire team according to seniority level? There were three of us in the room and I quickly found myself arguing a 2:1 minority position.
My take is that bonuses should be awarded to those who truly over performed. I think that we need to differentiate between those who merely perform and those that outshine the rest of the pack. In every organization there are a few individuals who carry more than their fair share of the load. These stars should be publicly recognized and lavishly compensated. They are the example for the rest of the team. My colleagues believed that differentiating in this fashion would lead to frustration and discontent among those individuals who would not receive a bonus. They think that the bonuses should be paid as a reward to the entire team on a job well done, not to reward individuals.
My colleagues' position should be divided into two parts. First let's look at the discontentment argument. My problem with this argument is that it can easily be reversed. In my opinion, if we gave our star performers the same treatment as everyone else, THEY would be demotivated. Why work harder if you get the same treatment as everyone else? In addition, as long as the criteria for awarding the bonuses are clear and fair, and everyone knows that they too could achieve the same rewards by executing to those standards, what is there to complain about? My point is that business should be a meritocracy, not a commune. Yes, as heartless as some think it sounds, some people do deserve more than others because they give more to the organization. What's wrong with that?
The second argument made by my colleagues is a bit tougher to deal with. They claim that the team as a whole should be recognized for the achievement and that this would encourage team work and limit political behavior. Possibly that's true. However, I think that we can recognize the team's overall performance by giving some kind of group award, such as having a big party, giving each team member a small token of appreciation (a bottle of wine? a certificate to Amazon?) or having a fun event. That does not mean that the bonus pool needs to be "fairly" shared...
By the way, just so that I am not suspected of ulterior motives, no-one is talking of giving a bonus to the executive team. In fact, our bonuses this year were eliminated in recognition of the economic environment, while the rest of the team received their bonuses as scheduled.
I would love to know what the rest of you are thinking about this issue, but I can't promise to change my mind.