The bonuses are the most discussed compensation component in the recession. As the bonus is directly linked to the overall business performance and the profit should be reached to pay the bonuses to employees, they feel uncertain about their bonuses in the recession.
The top management has to ask for a quick bonus analysis, when the profit will reach some level and the impact on employees and their total cash for the year. The top management has to be very conservative in the communication of the recession impact on the bonuses of employees.
The employees can live without their bonuses usually, when the bonuses are not a significant part of their total income, but they have to know the solution provided by the top management.
The HRM Function and Finance have to prepare the good analysis, which can offer several bonus payment options to the top management. The bonuses can be stopped, the company can pay the symbolic bonus to every employee or it can adjust its profits for the bonus calculation.
The employees would love to have their bonus calculation adjusted, but this is very dangerous as the employees will feel that the bonuses will be always paid to them and they would not worry about the overall company results as they are not important for their personal income.
The bonuses are not motivational compensation component in the recession, but the organization has to continue in the bonus system development as the employees can feel the pressure for the personal performance improvement. The bonuses play a significant motivational role in the era of the economic growth and they play the role of the demotivator in the recession as they transfer the recession directly to the total cash of the individual employees.
