Monday, April 21, 2008

My Question about Compensation Management Today

Who the hell came up with the idea to pay bonuses to professional workers?

For those of you that have been sleeping underneath a rock for the past two decades, bonus pay is pay for performance: meet a certain benchmark, and you will earn extra cash at the end of the quarter or year. It can also take the form of a general commission (IE, you get paid 10% of each sale).

Such pay is considered to be a highly effective form of motivation for a lot of different kinds of people: you can give bonuses to executives so they actually work instead of lounging on a beach in the Bahamas, you can pay line-workers for every extra widget they produce, and you can let salespeople keep a portion of every sale they make. That all makes sense.

My question is, why would you pay financial analysts or accountants bonuses on anything other than how quickly they get work done?

Does that make sense to anyone?

Me thinks that someone in charge of compensation isn't thinking correctly...but you know what they say. Once you give a kid a hammer, everything looks a nail. I'm just used to seeing that kind of mindset on internet forums or in an Econ 101 class.

3 comments:

XW said...

Because reconciliation on the accounts payable and receivable sides is worthy of meeting a 'quota'. If your company's owed $2.8 million this quarter and you can get your accountants to reconcile $2.5 million of that, then they'd be fairly deserving of a bonus, no?

Les Eman said...

It sounds similar to how Stalin would give rewards to factories that exceeded their quota output...except worse.

Anonymous said...

"Does this make sense to anyone?"


This is a slightly retarded question to ask. Its pretty obvious. One firm did it, and to be competitive, other firms must now follow suit. Its how competition works.

An analyst will not turn down a company who offers bonuses, if the only difference between it and others is the bonus policy in question.


Its all about competition.