How to interpret reduced retention bonus offer

Question

Our workplace tends to use retention bonuses as part of the total salary package for most employees.

I've just received my bonus offer for this year, and it is substantially lower than in previous years. It translates to approximately 4% of my base salary. Having done a bit of research, it seems retention bonuses are typically much higher than this.

This also means that even with the standard base salary increase for the year, my actual total remuneration will be lower than in previous years.

So I'm essentially being asked to take a pay cut. However there has been no mention about disastisfaction with my work, or about company financial issues etc. Also my workload, responsibilities, and stress levels are as high as ever.

I'm wondering how I should interpret this. My immediate thought is that if they're prepared to offer so little as a retention bonus, they're possibly not too concerned about actually retaining me.

If that's the case, I'm wondering if it's even worth trying to negotiate a better bonus, or whether I should simply look elsewhere.

So I'm hoping people could offer some insights into what this might mean. I've never been in a situation before where I've been expected to take a pay cut.

Answer 1

You could always express your concerns to your manager and get the answer straight from the horses mouth.

Barring that it's really hard to say how it ought to be interpreted without more information. Like if everyone else got a similarly small retention bonus then that may suggest that the company didn't perform as well this year as they had the year before.

But that said, the company is not obligated at all to give you any sort of bonus. Like you probably have written documentation of your salary somewhere and that kinda obligates the company to honor that unless they want to risk a lawsuit. But the bonus? Most bonuses are variable amounts at the companies discretion and no lawsuit that anyone might bring would hold any weight in court.

If you want compensation you can count on don't go looking for it in bonuses.

Answer 2

We may have a small terminology issue here. What you describe sounds like a regular bonus. Retention bonuses are typically only paid for "special occasions" where it's likely or extremely disruptive if an employee leaves. That includes the employee resigning, a sale/merger or major re-org of the company, change in location, being a key contributor on a critical project etc. Retention bonuses are very situational dependent and hard to predict.

Regular bonus on the other hand are fairly common and are often guided by some simple rules which the company may or may not publish to the employees. It's often dependent only on the financial performance (or other quantitative metrics) of the company and the employees performance.

If you got less than expected, than the most likely reasons are A) The company is not doing well, B) you are not doing well, or C) a combination of both.

What you an do

1. Read up on your company handbook or policies. Make sure you understand everything that is says about your bonus.
2. Keep your ears open: were you the only dinged or are other people grumbling too.
3. Look back it your two performance reviews. Read them carefully and make sure the ratings and feedback doesn't contain something you were expected to address and that there is no negative trend.
4. Gather as much info about the financial state of the company as you can. Earnings reports, sales numbers, marketing spend, etc. Whatever is available to you.
5. Once you are armed with all the information above, talk to your manager. If they are evasive you can push with the information that you have already gathered. You really want to know whether they are trying to manage you out the door or if something else is going on.

If they want you out, there are only two things you can do: trying to really understand why they want you out and assess whether it's fixable or start looking now.

Answer 3

You got the message, a low bonus is the cooperate way telling you to improve or move on without having to actually speaking the words.

Ask your manager for guidance to improve your performance...

I would bring this up in the next One-On-One session (do not wait until next performance review) and simply ask if your priorities are set in line with the goals of the company/department and team, if you are interpreting your targets correctly and if there is anything you should improve on.

You could even mention that you like your bonus and is willing to work harder to achieve an even better outcome next year. Do not complain about it being too low, just indicate you would like to set next years goal even higher.

...or move on

To get a better view of your market value start interviewing for other companies immediately, since all interviews are done over zoom or skype nowadays this process is quicker and less painful now than it used to be.