Total potential earnings have been reduced, how to deal with?

Question

I've just had my annual salary review, which has caused my remuneration to change.

• My base salary has gone up.
• My potential bonus has shifted from 20%, to 8% minimum (Although it's not really a minimum, you can still get less).

When both changes are taken into account, and if I achieve the 8% minimum, my earnings will be less than last year.

My manager has stated my position is now better because 8% is the minimum, and my bonus is no longer capped at 20%, it is unlimited. In reality however, I know of high performers who have been awarded less than 8%.

My questions are:

1. Am I in a good position to ask them to match my current potential earnings, by raising the base salary to match (at an assumed 8% bonus).

2. This happened today, should I pursue this matter ASAP, or is it okay to let it sit for a week or two?

Answer 1

Am I in a good position to ask them to match my current potential earnings, by raising the base salary to match (at an assumed 8% bonus).

I'm not sure I would call this a "good position". You have a better base, and now also have a chance for an unlimited bonus as well. But you feel you may not be able to achieve a large bonus because of what you have seen happen to other "high-performers".

It's perfectly reasonable for you to ask for your base salary to be raised if you feel strongly about it. But certainly the company revised the earnings structure for a reason, so don't be surprised if they decline your request. (I'm assuming here that the changes were company-wide, or at least department-wide, and not simply directed at you individually.)

Every company where I have worked that had bonuses, did not let people opt-out or adjust their bonus structure. But you can always ask.

This happened today, should I pursue this matter ASAP, or is it okay to let it sit for a week or two?

There's no value in waiting. I'd start this process today. Often, it's harder to undo something after it shows up in the next payroll.

Answer 2

Am I in a good position to ask them to match my current potential earnings, by raising the base salary to match (at an assumed 8% bonus).

No. Bonuses are... bonuses, and not salary. When I evaluated my total compensation for my current job's offer, I discounted the bonus to less than half of the target bonus. It's not a guarantee or else it wouldn't be called a bonus.

If your company is remotely smart they will have some language like, "bonus subject to change by company at any time" blah blah language associated with their bonus program.

This happened today, should I pursue this matter ASAP, or is it okay to let it sit for a week or two?

Your manager has already told you that this has taken place. You got a base salary raise. Your manager has spoken highly of the improvement, rather than receiving your frustration/criticism.

I'm not sure what you hope to accomplish by pressing the issue since it seems you and your manager already discussed this and your manager approached the subject positively. If anything, suggest concern your total compensation went down. But you already got a raise timed to match the decreased bonus potential...

Answer 3

I would suggest you go back to him, tell him what you want as far as salary. Don't even mention the bonus or ask for a larger bonus. Then if you get it great, if not then consider moving on to somewhere else that will pay you what you want to be happy.

In the future don't even consider bonus in considering what you want for compensation; bonuses are never guaranteed money and they are never guaranteeed to be offered every year. Businesses like to offer bonuses like this to cheat you out of salary by making you think you are getting more than you will actually get over time. Insist on the salary compensation you want and enjoy a bonus if you get it, but consider it a one-time extra (like winning the lottery) not compensation.

Answer 4

Something to keep in mind, and I know sales is different than other positions, bonus is just that a bonus. It's not guaranteed in any way. Having more base pay (around 10% more if I do the math right on your post) is a pretty good "guarantee".

So will you make less, maybe, make more, maybe. In the end it will depend on that bonus plan. I worked in a facility that was manufacturing based and gave a bonus based on annual overall company performance. After a year or two where goals were not met, the line workers complained and got a raise offset by being dropped from the bonus plan. They were all pretty happy, that is until the white collars, who were not dropped from the bonus plan, got a huge bonus when they did meet plan that year, mostly due to the work on the line workers killing it in December.

So in the end, some years you WILL make more than had you been in the bonus plan, and other years not so much.

As for waiting, I wouldn't wait more than a few days to discuss this. However, it seems like a fair plan to me given the lower risk in the guaranteed money vs. higher risk bonus money.

Answer 5

Unless you are willing to quit over it, you can pretty much assume they have considered all your arguments before making their decision. (And before quitting check how likely it is that a future employer will make a significantly better offer. This may still be the best option available.)

Bonuses -- and indeed salary -- are not guaranteed to monotonically increase or to continue to be based on the same formulas. That depends on the needs of the business. The company has decided that its needs have changed, and/or that the incentives have not delivered the hoped-for improvements in the employees.

Your only choices are to come up with numbers that demonstrate they're wrong (not likely; they have more data about company operations than you do), to accept the new offer and hope they change the plan again in the future and that those changes favor you, or to walk.