tl;dr: All options at this point are bad, and choosing any of them and imposing it on the team means that some will "win" while others "lose", and this will exacerbate the issue. The team needs to make a decision that moves things forward, but that will be difficult as long as each member seeks benefits for themselves.
As other answers have pointed out, no, this is not common practice, and no, this was not a good move made by your manager.
The problem, as you've seen, is that everyone will advocate for an approach which would (conveniently) happen to especially benefit them. And, now that all of the most obvious strategies have been publicly proposed by different people, even kicking the can back to your manager could fail because staff will be aware of the full bonus amount to be disbursed and can evaluate their own share against that value. At least in that case your manager would (rightly) bear the blame, but assuming that the manager is aware of that this is not an attractive option for them.
Right now, everyone is probably assuming that their preferred bonus scheme is the default and therefore any other option is one that takes money out of their own pockets. This isn't really a valid way to think about it (there is no default bonus payout option on offer), but that won't calm people down very much.
I advanced an idea about randomizing bonuses to minimize senses of winning/losing among a team which cannot agree yesterday, which was not popular (a likely preview of your team's reaction). I had a different idea last night which is better in many respects but is also vulnerable to being gamed: preference weighted voting.
There are a lot of ways to do it, but the easiest would be something like:
- People suggest possible ways to distribute the bonus pool (there's no
real upper limit to how many suggestions you could use, but more
suggestions makes preference ordering harder and also is one of the
easier ways to game the system)
- Everyone votes for a method of distribution by writing a number next
to it, with 1 being their most preferred option. Every person should
record a preference for each option
- Each option then has its preference rankings summed, and the option with
the lowest total wins
I've used this option, though never in a situation as severe as this one. Its best feature is that it gets people to consider options beyond the one that benefits them most, allowing you to get to "compromise" options.
Below is an option which moves things forward, does not impose any one person's preferred solution, and pays out bonuses. It is not ideal, but offers minimally-passable damage control by paying bonuses without anyone "winning" at the expense of the others.
We're into the realm of least-bad solutions rather than most-good. I've been in roughly similar situations, where there is disagreement about how limited resources should be allocated among many parties with a personal stake in the situation. The best solutions have always been those which decouple
advocating an option with receiving the maximum possible benefit from that option.
Here is what I would do in this case, assuming that the decision cannot be returned to the manager and bonuses must be paid out this year:
- Tell everyone that once a payout scheme is chosen and the payout
amounts defined, each person will randomly receive one of the
payouts. This can be done in any number of ways (drawing lots,
rolling dice, picking numbers out of a hat). The important thing is
that all participants agree that the choosing is impartial. Each
participant has a chance of getting any of the payouts available
under whatever scheme is chosen. The order of people being assigned payments can (and probably should) also be randomized
- Allow everyone to propose, at most, one idea for how the money might
- Calculate the different bonus values that would be available under
each scheme (i.e., "merit based" would be one payout of $X, another
payout of $Y, and so on until the pool is depleted, while "equal
splits" would be 8 payouts of $6,375 each, etc.)
- Allow people to either vote on options, runoff style, or randomly
choose one of the options
- Once a method is chosen, randomly assign the pre-determined payout
amounts to employees
Obviously this is far from ideal. Since this is essentially a veil of ignorance setup, the rational thing to do would be for people to coalesce around an essentially even payout, since that maximizes the expected value of the least-lucky choice available, and anyone at all might be the least lucky in a random draw.
This is not necessarily a fair distribution, but since your group cannot agree on what would be fair that's not a realistic outcome to aim for. This approach is a way to move forward with the participation and buy-in (if grudging) of each employee. Everyone has a chance to offer an approach, and everyone has every chance of getting the best or worst bonus available under any given approach.
The most important thing to bear in mind during this process is that, had your manager done their job properly, the manager would have chosen a bonus payout method, and everyone would have been compensated according to that method with no chance to appeal or influence the process in their favor, and there would have been little conflict. Now that you're in this mess, it's the conflict that needs sorting out, and the bonus disbursement is almost secondary.