Apparently, many managers are unconvinced about the motivational effects of bonuses. Bulletpoint’s research of over 200 managers from different countries found that:
* Bonuses have little impact.. on behaviour or on daily decision making. Managers confessed to lowballing (setting low targets to ensure payouts)
* Big bonuses linked to unit performance create dysfunction...because when the bonus makes up big part of pay, time spent on deciding allocation is high; also unit (rather than corporate linked bonuses) foster ‘gaming’.
Other interesting findings show:
* Profitability is key to efficacy: Bonuses are more likely to have a positive impact on behaviour when the firm’s performance is strong
* Teamwork not pay predicts firm’s performance: The extent to which a firm has a team-based culture is a far more reliable predictor of performance than bonuses. The paradox: managers say bonuses have only a slight impact on motivation yet they pay them primarily to motivate. Why?
* Copycat behaviour - if a competitor pays a bonus, organisations feel they must too; also bonus payments are often highlighted - seemingly without reason - as a best practice.
* National differences - bonuses are a US idea exported globally through e.g. multinationals, joint ventures and arguably work better in US where individuality and tolerance for uncertainty are greater than in Europe.
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