Advertisement
Employee Benefits

Should a Hot Division Get a Bigger Bonus?

The goal isn’t to please everyone but to attract and retain talented staff. This can be accomplished with different approaches.

Q: I’m 25. At the medium-size company where I work, compensation, especially the annual raise and bonus, is tied to the performance of the company, rather than a department’s success or an individual’s performance. My division is profitable and growing. I feel I’m penalized with small raises and bonuses for the lackluster performance of other departments, which are dragging down the company’s overall success.

Advertisement - Article continues below

The company apparently has a long tradition of “We’re all in this together,” with generous rewards for all when the company prospers and universal belt-tightening when it doesn’t. Longtime employees seem to like this, but my peers and I think it would be fairer to have individualized incentives. What do you think?

This is less about ethics than about different corporate cultures. The view you express is very common among young workers, who seem to find the communal culture you’re describing old-fashioned and unfair. In their minds, the lackluster performance of other divisions -- and perhaps the company as a whole -- isn’t their problem, and it shouldn’t affect their compensation. But veteran employees -- who probably include senior managers -- have long memories and know that a star division one year might be a laggard the next, so the communal approach smoothes things out.

Advertisement
Advertisement - Article continues below

Some companies thrive by fostering rivalry among departments and making sure the winners get rewarded more than others. Other firms believe that esprit de corps is hurt (and resentment festers) if word gets out that some departments got fat raises and bonuses and others didn’t; ambitious employees might seek transfers to those departments to improve their pay.

Compensation policy should seem rational and consistent to employees. And top performers in every division should be recognized both publicly and monetarily. But in the end, the goal isn’t to please everyone but to attract and retain talented staff. Different approaches can accomplish that.

Have a money-and-ethics question you'd like me to answer in this column? Write to me at ethics@kiplinger.com.

Advertisement

Most Popular

65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
8 Ways You Might Be Cheating on Your Taxes
taxes

8 Ways You Might Be Cheating on Your Taxes

Don't fall into these common traps that can get you in hot water with the IRS.
July 8, 2020
Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020

Recommended

Nursing in the Time of COVID-19
Financial Planning

Nursing in the Time of COVID-19

This health care professional warns that the pandemic will worsen the nursing shortage.
July 2, 2020
Chiropractor Trying to Get Business the Wrong Way – Illegally
careers

Chiropractor Trying to Get Business the Wrong Way – Illegally

A new chiropractor’s fledgling business plan to attract patients may sound reasonable at first look, but it’s actually against the law, and the same p…
June 30, 2020
Post-COVID-19, Seniors Must Chart a New Path in the Workplace
retirement

Post-COVID-19, Seniors Must Chart a New Path in the Workplace

Those most vulnerable to the pandemic will face challenges in the return to work, even as the recession means they may need their paychecks more than …
June 11, 2020
Dealing with an Early, Unexpected Retirement
retirement

Dealing with an Early, Unexpected Retirement

Current economic and health crises may be pushing many toward an unexpected retirement. Now is a good time to make a plan for yourself, just in case.
June 9, 2020