As you can see, the bonuses have a special role in the current business world. The bonuses should be a small extra for the effort and performance given to the organization. The bonus should be paid, when the organization has the profit to pay bonuses from. But reading the newspapers, the banks in troubles plan to pay the bonuses to their employees as they met the goals.
The bonus lost its role as the compensation component rewarding the performance and the overall company results. The company results were not important as the companies enjoyed several records during last years. The bonuses were paid and the calculation and distribution of bonuses was a nice job. The employees had no worries about their bonuses and they became a part of their income. The bonuses lost their role as the bonuses are automatically paid.
The bonuses are the variable part of the compensation scheme, but the companies and employees took bonuses to be variable just on one end. The bonuses had to be higher than the bonuses for the previous period. The expectation was set and no one informed and warned the employees about the future development. Each bonus has to be accompanied by the warning. The employees cannot plan the next bonus as the situation of the organization can change completely. But, the economic crisis was a strange topic for several economists and who would care about such a stupid warning.
The employees enjoyed the comfort of the additional income and they made a huge mistake. They started to calculate the bonus into their regular income. All the payments and investments were planned, as the bonus will be definitely paid by the organization. The employees were not advised not to count on bonuses, but the reality allowed them to do so.
Last year was a year of the big change. The companies did not outperform the last year, the plans were not fulfilled and the top management had to make a very difficult decision. The bonuses had to receive their role back. But, the top management had no courage to announce bad news to employees. The employees were expecting the messages from the top management and the management was searching for the way to pay the bonuses. The results are known and well described in the newspapers. The companies need a lot of help from the government, but the bonuses are released.
The top management had no courage to announce the truth to employees. That the company did not make enough money to pay bonuses and the goal setting process was wrong for several years. The top management tried to meet the expectations of employees and did not focus on the expectations of shareholders and the external world.
All HR Professionals should remember this as a good lesson. The bonuses are dangerous and they have to be kept under a control, even in the times of the economic boom. When the economic crisis or the recession comes, the bonuses can be a real nightmare for the organization.
