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During the past year I have put in a lot of effort towards a particular project that I have been assigned. My effort has paid off and I have had a great performance review with which I am really happy and grateful. I was hoping to work towards a salary increase, however my manager has mentioned it is not possible (company policy) to get a salary increase unless I get a promotion or move to another position.

However, he has come up with a potential solution to my request - a new bonus incentive where I will receive a one-off payment of about 6% of my salary if my completed product sells well (meets a specific target for sales) in the market. However this would mean me taking responsibility to drive the project to it's deadline in 2 months. I am not sure if I should take up this offer, as I am not responsible for the sales side of the project, and the 2 months completion time is IMO a bit optimistic.

In summary this bonus scheme does not make sense to me, though I could do with the extra income if it comes through. I am not sure what to do here - is this a sensible offer from my manager in response to my request for a salary increase, would it potentially leave a bad mark on my performance if I failed to meet the target and achieve the bonus?

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    Is there any negative to taking him up on the offer? What happens if you don't complete it in time?
    – Gamora
    Dec 2, 2019 at 15:59
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    There are options about getting a raise. One way to do so, is to move to a different company. This is the option your current company is suggesting. It seems silly, but companies do this all they time. They will probably higher a replacement for you, who won't do as good of a job, and pay them more than what would have made you happy. Its company policy after all.
    – Pete B.
    Dec 2, 2019 at 16:01
  • @JoeStrazzere it is not a risk free chance. There is opportunity cost if a new job would pay more. There is reputational risk if failing the 2 month objective would be used as a reason not to give him future raises. There is whether it would even be a good deal if the job required substantial overtime, which could easily render the best case scenario a bad deal.
    – Matthew Gaiser
    Dec 2, 2019 at 16:19

4 Answers 4

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Some things to consider about this offer

How much control do you have over the project being completed? This is to determine if the deal is good even within the company.

  1. Do you control who is assigned to the project? Are you guaranteed the required resources?

  2. Do you have authority over the others on the project? Are they your underlings rather than the power being informal?

  3. Do you control the scope of the project? Do you get to say when it is done? Has the project spec already been written with requirements carefully speced out?

  4. Are you management of some form on the project such as the software lead or project manager?

  5. Do you decide what done means? Will your deadline be adjusted in the event of a department event (For example, my manager just left at my job, causing 3 weeks of delays to projects).

  6. Can you complete the project independently? Is the bus factor for the project of getting your bonus fairly large? If you lost a team member (as could easily happen given your company's attitude to raises), would the bonus likely be kept?

  7. Are there provisions for if the company decides not to launch the product? It gets blocked in a lawsuit? Is a plan in place to market the product? Is it a product known to sell well?

The fewer of those questions you can answer yes to, the worse this deal is. If you are merely a random software developer on the team, the deal is terrible. If the project is one of those Agile/Scrum projects with ever-changing goals, the deal is terrible.

Then there is the flip side, such as whether this deal is good at all. This is to determine if the deal makes more sense than a new job.

  1. Would switching companies lead to more than a 6% increase? Would you get more than a 3% increase just switching jobs (I am factoring in a 50% risk premium here on the bonus)? Make sure to factor in total compensation if you are getting shares.

  2. Would this deal only be available for this year? Would the deal be considered part of your raise if you later got one? What about inflation based raises? Would you be declined one over already getting yours in the deal?

  3. Will many extra hours need to go into getting the bonus? When calculated on an hourly basis, will your pay decline? 6% more hours (assuming a 40 hour workweek) is just 120 hours or just 15 extra hours a week in those two months.

The more questions above you answer yes to, the worse the deal is.

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    There's also the point that the following year, another 6% bonus would be the same amount of money, whereas with two 6% pay rises, the second one is worth 106% the value of the first
    – Player One
    Dec 2, 2019 at 6:11
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    The section of your answer on the pay bonus seems off. OP gets a one-time payment of 6% of (yearly I strongly hope) salary, so that would be like 3/4 of a regular pay check. In most situations this is much worse than an increase in monthly salary, precisely because it is a one-time thing, does not carry over to next year and their is no 'compounded interest' with your next raise/ inflation adjustment.
    – quarague
    Dec 2, 2019 at 13:11
  • @quarague very true. There is the cost of additional raises lost.
    – Matthew Gaiser
    Dec 2, 2019 at 15:43
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    @MatthewGaiser Thanks for the answer, 1. I don't have full control of resources, but can request for more 2. I am the sole person on the project, so I would have authority but it would be very much informal 3. The scope is controlled by the CEO 4. I am the software lead 5. The CEO decides what constitutes the completion but is flexible 6. The project requires assistance from other members of the team to interface with existing software 7. There is a known demand in the market for this product, it has been requested by multiple clients.
    – KDev
    Dec 2, 2019 at 22:24
  • @MatthewGaiser on the flip side, the answer would be a "yes" to your last 3 questions. So perhaps this deal isn't as good as I thought.
    – KDev
    Dec 2, 2019 at 22:29
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Here's a question - how much overtime will you have to work to fulfill both goals?

  • that this project is finished in two months, which you yourself said is a bit optimistic, so, it would in the best case require extra work
  • that it sells well (and how much control do you have over that, anyway? If they meant for you to make it look extra nice so it sells better, it again means more work)

If it turns out that you need to work +30% time for two months - which is +5% recalculated to an annual basis - and get only 6% bonus, the whole thing makes no sense.

Overtime should be

  • paid more than the regular time
  • should be guaranteed - if you worked +30% time, you should be paid at least +30% (more, actually, because of the previous point).

In this scheme your manager proposed, it would not be guaranteed, so it could happen that you work a lot and not get paid for it at all. How well it sells is a bit outside of what you can guarantee.

Based on this, it's a bad deal. If they want to condition it on how much it sells, they should offer you a percentage of sales... and they probably won't do that. A small percentage of your salary, and not guaranteed even if you spend a lot of time? That's laughable.

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I am going to target the specific aspect of raise in my answer.

If you are working on something that generates money for the company and are doing it well, it makes perfect sense to ask for a raise. You make them more money = you are worth more to the company. If it is a small company, then this "company policy" is basically just buzzword. If it is a big company and they have a clear pay structure, then it can actually mean something. If that is the case, accept the 6% and ask very clearly what goals you have to reach to get a promotion which will ensure a permanent raise instead of one-off payment. If it is a small company, they simply do not want to pay you more. If you found another company that is ready to pay you more, I bet my hat they would make an exception for 6% and then some (This is assuming you are bringing in money).

Make it clear you want to advance your career, and get the requirements for that to happen clear. If your future at the company is an absolute mystery, is it really worth staying there?

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A good performance review is partially down to luck, but the other part is down entirely to yourself. So it does not make sense to be grateful toward your manager for a good review: all they did was observing that you performed well. Of course it's nice if someone tells you that you did a good job, but you want more: a raise or a promotion. So have you actually asked this? (Google how to ask for a raise for instructions.)

Your manager has mentioned that giving a raise in your current position would be against company policy. But there are ways around this objection, they can promote you, for instance. Even if that's not going to happen, they can make an exception: the bonus scheme you were offered is (presumably) also not a regular company policy. Additionally, the fact that they are offering you this deal in the first place indicates that they would like to keep you, i.e. you have some negotiating power. You can increase your negotiating power by interviewing for other jobs. Perhaps you'll be offered a better job, or at least a higher salary offer that you can take back your current employer.

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