A bonus is a financial pat on the back. It’s something you can be proud of, as it recognizes the superior effort you’ve put in at your office … isn’t it?
According to a new study, receiving a bonus is far less closely tied to job performance than you may have thought.
The research, administered by Towers Watson, a professional services company, found that 25% of managers in North America plan to give a financial reward of some kind to the employees they rank as their lowest performers. Additionally, 18% don’t distinguish at all between the highest and lowest performers when writing out amounts on those bonus checks, MarketWatch reports.
Why Reward Underachievers?
You would think that paying out an across-the-board bonus, regardless of quality of work, could trigger office tension, cause resentment and leave the top employees feeling unacknowledged and under-appreciated. So why do employers do it?
Some experts posit that it’s simply easier for managers to pay out bonuses to everyone, rather than sit down with an underperforming employee to discuss why he or she won’t be receiving a bonus.
Avoiding these discussions in favor of universal bonuses, however, can have a negative affect on more than company morale. Nicholas Bloom, a professor of economics at Stanford University, told MarketWatch that companies that reward all employees equally grow more slowly, make less money and are worth less when publicly quoted.
The Problem With Performance-Based Raises
There are several roadblocks for employers who wish to base bonus payouts on employees’ performance.
First, bonus determination programs that focus too much on criticism can be detrimental to both managers’ and employees’ work attitudes.
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Additionally, figuring out how exactly to rate performance can be challenging. Employees’ ability to meet quotas, a popular choice for measuring performance, can be swayed by a majority of factors—like the economic climate.
Despite the complications that surround bonuses and how they should be distributed, research shows that it may not ultimately make a difference in employee productivity. Less than half of survey participants noted a “clear link” between their performance on the job and their bonus pay.