Bonus calculation: Am I making a mountain out of a molehill?

Question

Every manager in my company gets a yearly bonus, based on past year performance.

The bonus can range from 0% to 200% of a month's salary.

The main catch is that there is a fixed budget for each department, corresponding to everyone getting 100%. In order to give more to someone, the head of the department must take away from somebody else.

(There is about 15 managers in my department, all close colleagues)

This resulted to everyone getting between 95 and 105%, allowing the boss to make a statement one way or an other, but not piss off anyone.

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Top brass realized this, and this year changed the rules, with mandatory bonus brackets depending on the performance assessment. Bad performers would get between 0 and 20%, top performers between 170 and 200%. Yet, the fixed budget for each department remains. There has been training, newsletters, and so on.

During my annual review, I have been evaluated as 'Over-performer', putting me in the 110-140% bracket.

Yet, when the check arrived, I only got 103% of my salary as bonus.

I complained to my manager, and the department head answered (was not CCed, the mail was likely forwarded) along the lines of:

• You are correct, you should have been at least at 110%, no contestation.

• However, there is too many good people on the team, and I did not want to give too low a score to anyone. I have always done this, it is no surprise to anyone.

• Take a step back, and think about how lucky you are to have a job. (This cannot be a threat, this is France, I basically cannot be fired - This is more Gen X thinking millenials are spoiled brats who dare complain about their bonus).

I am pissed. I understand the arguments, but I don't really see how that is my problem. On the other hand, it's only a small fraction of my salary, so I'm trying to let it go.

My question is: If you have been in this situation, especially as a manager. What kind of leeway do you have to handle such situations?

Answer 1

there is too many good people on the team

Since you didn't say anything about other employees not deserving a full bonus, I'll assume this statement is true. And if this is true (and you don't have a manager who has trouble giving critical feedback and/or doesn't want to address performance issues), than I'd be miffed by the system, not my manager.

Because if a majority of employees do perform well, it means that to be able to give 140% to some people, your manager needs to start grading on a curve. This means that even if someone did their job well, even if they over-performed, if they didn't perform better than let's say the top 30% of employees, they'll get a bonus of less than 100%. Are you ready to accept a lower grade because some other employees did better than you, and to respect the new policy your manager has to give you less ? Or maybe you are in the top percentile where you still get a big bonus, but are you ok with other good workers getting a small one, which won't reflect their effort ?

You could go to HR, maybe you'll force this way your manager to give you the 7% remaining. But then I wouldn't hold my breath for next year's review. If your manager does start to grade on a curve instead of giving a fair review to everyone, I don't think you'll be at the top of it. Beyond this, you risk hurting your relationship with your manager, as well as with your colleagues if they hear of it (because if you get more, someone has to get less).

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EDIT (following comment)

You always have the option to talk to your manager again, or ask to talk to the department head (if it's something that is not out of the norm in your company). You won't be able to get the full raise your review score should allow you, but having clearer expectations for next year might help you deal with this set-up. I'd go to one of them and ask :

• Since company policies aren't being followed, how do they plan to handle reviews and bonuses in the future ?
• What kind of performance warrants a bonus of 110% and more ?

If you really want to, you can also mention that it is demoralizing to be granted a bonus, but only receive part of it (only you know if this will go over well). If you say this, do mention also that you know the system is unfair, that you understand it must be hard for them,... Maybe you'll get some answers, or explanations, or an indication that something is in the works. Or that they have tried to change this but failed. But I would say this if you have a very good rapport with that person.

Answer 2

Your supervisor is not following the official rules because they realize those rules are shit going to hurt good people.

Consider.

Top brass realized this, and this year changed the rules, with mandatory bonus brackets depending on the performance assessment. Bad performers would get between 0 and 20%, top performers between 170 and 200%. Yet, the fixed budget for each department remains. There has been training, newsletters, and so on.

Each department has a fixed budget for bonuses. If everyone in the department is evaluated at or above the average expectations, there's no one to take money from in order to give those high performers the 170-200% they're promised. The rules would make sense if you had a range of poor to excellent performers, but it falls apart when everyone is good or better. It would also work if the budget wasn't fixed and everyone could receive a bonus determined only by their own performance, but it is fixed and every extra dollar given to one employee comes directly from another.

I think your boss realizes this. They probably realize that anyone who gets a 0-20% bonus is on their way out the door, either voluntarily or not. They clearly think most or all of their team are good workers, and they want to keep them. If they gave bonuses on a curve as they're officially required to, they'd have to give some good workers a bonus that communicates in no uncertain terms that the company values them about as much as a smelly brown smear on the bottom of a shoe.

So, instead of hurting good employees needlessly, they're breaking the rules and sticking with their previous policy of giving 95-105% bonuses. And they're not writing down or explicitly stating that they're doing it because that'd be the opposite of CYA.

(As a side note, if this is the case, then you're actually doing well to get 103%. It means that among your department, your boss thinks you are doing better than average, which is impressive considering most of your colleagues are high performers.)

If you complain about it outside of your department, it's likely Top Brass is going to crack down and really force the issue. Your boss will probably get in trouble, which they won't appreciate. Some of your colleagues will get bonuses that hurt them both in terms of finances and morale. Some of them will probably leave. Or Top Brass will fire them because they're the worst workers in the department, never mind that they actually do really good work and will be hard to replace.

On the other hand, you could recognize that your boss is actually sticking their neck out there to keep from hurting good people due to bad policy.

Aren't office politics great? /s

Answer 3

You were promised a thing, multiple sources informed you about the thing. You put in the effort to get the thing.

You did not get the thing because of an arbitrary rule you did not know beforehand, your colleagues did not know beforehand and basically it boils down to "because I said so"

So you are right to feel upset.

On what to do now I can't really say because it really depends on your manager. Is he the non-confrontational type? Then you might be able to get the rest of your bonus by taking it out of his hands. But that will hurt him, don't depend on being friends afterwards.

Is he the authority type who enjoys handing out favours like a king on his throne? Yeah, then you can force the situation but I'd also start looking for a job.

Answer 4

You have earned your bonus and after your queried the amount, your manager acknowledged that your performance has been above average.

It's understandable that you are annoyed that you didn't get the correct level and that your department head has effectively reduced your bonus to keep people who have not performed as well as you happy.

I think that I'd be doing the same as you, you've raised the question but is 7% of a months' pay worth fighting over? If you fought this and did actually managed to change it then they would either have to make you a special payment or adjust the bonuses they had already promised / paid others to make them fit the budget. It might be a hard fight to win and you probably wouldn't make any friends in senior management by doing this.

He probably doesn't have much leeway to change your bonus now.

It might be better instead to use this as leverage in your annual review - Your department head is now on record as saying that your performance is better than average so you have a case to ask for a pay rise when you have your appraisal.

In terms of future bonuses this would also be beneficial as your bonus is based on percentages of a months pay so raising your annual salary would mean bigger bonuses as well.

Answer 5

Your manager admitted that you should have gotten at least 110% per company rules. It may be a case were you need to contact HR to enforce rules.

Another things is that if it will repeat and you are spoiled of 7~37% salary bonus, maybe only work to this target. However it's not a good mindset to be passive aggressive and in managerial position it's would not be easy to do. My advice would be to use this as rhetoric to your manager to explain why you feel cheated and it's sapping your motivation.

Answer 6

As to the legal aspect: a bonus is, by definition, an undefined extra your get on an arbitrary basis. To that end, you can't really strong-arm the company into giving you the bonus you were expected to.
Even if the bonus does not match what their initial estimates indicated, unless the context of their statement was legally binding (e.g. as part of a contract renewal), then it's not set in stone.

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But there is also a moral argument. You're dealing with a company whose top level management has decided to not give out bonuses based on performance. Regardless of whether your department outperforms itself or not, the total bonus amount is fixed. This means that the department employees are left to outperform their colleagues because they are in direct competition with each other over the share they get from the predetermined bonus pool.

While this may yield results, I find it incredibly manipulative. This is effectively pitting team members against each other, which can be massively detrimental to morale and likely to lessen any potential team spirit that was there.

Take a step back, and think about how lucky you are to have a job.

This actually shows the same "pitting you against the others" mentality. Rather than focusing on your employment (and subsequent wage/bonus), the manager has opted to focus on you versus the unemployed, thus shifting your focus towards non-employees as opposed to the company who did not give you the bonus you were told you were going to receive.

However, there is too many good people on the team, and I did not want to give too low a score to anyone. I have always done this, it is no surprise to anyone.

He is actually right there. It seems to have been a constant that bonuses are not taken to extremes, in an attempt to not cause rifts between employees.

To me, this suggests that top level management (whop sets the bonus budget and its rules) is less concerned about animosity between competing colleagues than the lower level management (who actually distributes the bonuses).

I can't fault your direct manager here. They've been dealt a shitty hand (a flawed bonus system) by their top level managers, and they are doing their best to not let it affect team morale.
However, this comes with the unfortunate downsides that individual effort is no longer rewarded (because the bonuses are distributed as equally as reasonably possible).

The question that remains it whether you're okay with that or not. If it were me, this would severely impact my spirit towards working for an increasing bonus since you're pretty much guaranteed to have roughly the same bonus anyway.
All the extra effort in the end amounts to and extra 10% (from 95% to 105%) of a month's wage, which is roughly 0.83% of your yearly wage.

Do the math here: is all the extra effort you put into your job worth more than 0.83% of your wage? If you're labeled an over-performer (and that's not just a lie management tells you to keep you motivated), then I would argue that it is not; and the "fair" bonus is being held back because management is trying to please the employees who would otherwise be receiving considerably less than a 95% bonus.

I don 't think your direct management is doing anything inherently wrong. They had two options, and either option was going to disadvantage a subset of their employees. They're trying to avoid colleague animosity as much as they can, which is actually a commendable goal. But they are doing it at the cost of destroying the bonus' financial incentive that is supposed to be award to high performers. By trying to keep the lower half happy by ensuring 95% of a standard bonus, they are taking away the additional 95% reward that the upper half of employees would have earned.

And there's nothing inherently wrong with that (although it should be communicated clearly, which it was not in your case). The company I currently work at hands out bonuses on a fixed %. The company (about 15 employees) is given a goal target (of company revenue). For each tier that is achieved (regardless who achieved it), everyone gets the same % of their wage as a bonus.
I like my company's system, but that's a personal preference. I'm sure that some of our higher performers might not be as happy about it. But it was communicated clearly, and everyone agreed to the system.

Whether you want to work in this atmosphere or not is your decision. If you are someone who is incentivized by trying to maximize their bonus, the current company's approach to bonuses simply does not match with your preference.

I would, however, suggest to discuss with your boss that the division of the bonuses is at their discretion, but that you would at least expect to have a clear expectation, instead of being told one thing and then receiving less than you were expecting.
if it happens once, it's possible that this is an unforeseen, unintentional and/or unavoidable situation. But it shouldn't happen a second time.

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As a sidenote:

What the company is doing wrong, in my opinion, is that they've told you that the bonus budget equals the sum of all managers' monthly wages. This creates a metric by which everyone can gauge whether they received a below-average or above-average bonus; which is what's causing the lower half to be unhappy about the bonus they received. No one likes being in the losing half.

What management should have done is obfuscated the math behind the bonus budget, and instead said "look, there is an unspecified amount of bonus money, and we will hand this out to people based on their performance".

This means that e.g. receiving a 75% bonus is not indicative of "losing the bonus game" because you don't know how much of the bonus budget that you've received. For all you know, you could've been awarded the lion's share of the bonus budget. You got some extra money, because you performed well. And that's a positive feeling. What the others received is not your business, and you shouldn't use this to measure the worth of your own bonus anyway.

But by knowing the amount of bonus money there is to award, employees can reverse engineer the calculations to figure out their position on the "bonus award" list, which is always going to end up negatively impacting morale for half of the list's members.

As a basic example:

I upvoted your question. Clearly, it means I value the question you have posted here, right? That's a good thing!

Now suppose I reveal that I give out 100 upvotes on questions every day, and I only read 5 questions per day (for the sake of example, assume I can give multiple upvotes to a question).

Suddenly, the one upvote I gave you has lost all of its meaning, because you can reverse engineer the math, knowing that I must have given the other 99 upvotes to the other 4 questions I read, which is just under 25 upvotes per question. Suddenly, your 1 upvote pales in comparison (it's 4% of what everyone else gets on average), and this will affect whether you think I value you.

Answer 7

In short, there is a pool of money that you and your coworkers are being given a bonus from. Performance is being rated, not by personal effort, but rather as a competition. Thus, the response boils down to one of three possibilities:

Option 1: Let it go.

Rather than making a fuss, realize that it is indeed a competition, and "unfortunately," you are on a team with a lot of good people. Accept that it means it will be hard to significantly outperform everyone enough to make anything extra, and move on. Scoff at upper management with the others around the water cooler, and expect that next year, nothing will change - and neither will your bonus. This is the safe option; the only downside is that your bonus is less than you'd want. Keep working hard, keep getting paid, but don't hold out hope it will ever get better.

Option 2: Put your foot down.

You were promised a certain amount of money, but you were not paid that amount of money. If you have a written agreement, get a signed statement from your boss, if you haven't already. It probably doesn't need to be any more complex than "Jean-Pierre's review places him in the Over-Performer category". Go to management - your boss's boss, or higher if you need to, and demand the appropriate payment. Be civil, but firm. "According to these newsletters and this training pamphlet, being in the 'over-performer' category means that I should have at least 110%, but I was only paid 103%. This is my signed review, showing that I am, indeed, in the 'over-performer' category. Please give me the difference, as that is what was agreed upon."

There may even be the possibility of legal recourse; I don't know the laws in France, but it's worth looking in to if you want to take this route.

However, this is not the safe option. The best outcome is that the company relents and pays you your intended bonus, then either drops or hobbles the bonus program for next year, realizing that they will have to pay everyone otherwise. The worst outcome is that they either change your review this year, or grade you (and/or your boss!) far more harshly next year. Either way, this will most likely result in quite a bit of additional tension at work; you said it's unlikely you'd get fired, but there are ways to make a job miserable enough that an employee quits voluntarily.

Option 3: Work what you were paid.

According to your review, you were an over performer; however, they only paid you for "meets expectations." Instead of working hard for the bonus, realize that no matter what, you will always be graded on a curve, and even breaking your back, you aren't going to get more than a few percentage points above 100%. So, instead of killing yourself with work, back off a bit. Put in "meets expectations" hours, and spending your newfound time relaxing. Work what you are paid, and not a minute more.

This is also not a safe alternative. If everyone you work with is an over-performer, and you suddenly become a "meets expectations" employee, you are going to be at the bottom of the pack, and first on the chopping block if layoffs happen. Your boss and coworkers will see that you aren't giving it your all, and will treat you differently, possibly to the point of hostility. If you go this route, keep your resume up to date.

Answer 8

if you outperform the best employee, you will get the maximum bonus. if you don't, you don't! easy-peasy what to do, right?! yes, go looking for another job, where they don't play games with your self-esteem! :-P

since people asked for clarification what that means:

no, you are not turning a molehill into a mountain. you are being abused and lied to. if the company wants top people, they should spend enough money to pay more than 100% bonus to everyone. just imagine all of you would perform equally bad and would get the same 100% bonus anyway? this system doesn't make sense.