Our thoughts on the world of employment law - and beyond.

Underperforming? Here, have a bonus.

A recent survey conducted by XpertHR and the Chartered Management Institute here suggests that nearly half of all managers whose employers rate them as 'not meeting expectations' were paid a bonus in 2014.

This is interesting, as most employers who operate a discretionary bonus scheme view it as a way to reward past performance and incentivise staff to achieve in the periods ahead.  Why, then, pay a bonus if someone is not meeting expectations?

Personally, I think it's about employees' expectations, and how uncomfortable it can be for employers (managers) not to meet these.  Despite some attempts to curb excessive bonuses (for example, the regulator-led push to move away from a big bonus culture in the financial sector), increasingly bonuses are seen by employees as the norm. 

Moreover, while in some roles there may be an obvious objective metric on which to assess some aspects of performance (chargeable hours for solicitors, for example), in many others it is difficult to quantify performance in any meaningful way.  This means that bonuses often end up being based on appraisal grades, which tend not to be an exact science, or on even less concrete factors.  This may make it harder to award a nil bonus, as it would involve having a potentially uncomfortable discussion about performance, in which managers would necessarily have hard facts available to back up their assessment.  Of those managers not meeting expectations, I wonder how many of them were made aware of this by their managers, and how often the issue was simply not discussed.

The same survey also suggests that employers are – increasingly – having difficulty recruiting staff with the right skills.  This might also shed some light on the statistics on bonuses for underperforming staff.  If a bonus is the norm then paying someone a zero bonus becomes the equivalent of showing them the door.  If you're going to struggle to replace leavers, better perhaps to retain a slightly poor performer than risk replacing them with a complete disaster…

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