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I've just been offered a new job. The salary is slightly less than I'm getting now but it includes "annual incentives for performance". This bonus could make it worthwhile changing jobs. Or it could be small or unattainable and make my current role more lucrative.

Is there a polite way to enquire what I could expect as a bonus without saying "That's not enough - give me more"?

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    Hey Coomie, and welcome to The Workplace. Is there a specific reason you feel uncomfortable asking, "What are the details of the performance-based incentives?" Or a specific reason you are worried they would regard this as "That's not enough - give me more"? – jmac Jan 15 '14 at 6:30
  • @jmac What I'm looking for is a way to say "that's not enough" without the offer of employment being withdrawn and given to someone willing to work for less. – Coomie Jan 15 '14 at 7:17
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    How can you know if it's enough or not if you don't know what the bonus structure is? It sounds like you may be asking two separate questions: 1) how do I ask what I can expect as a bonus? 2) how can I negotiate my salary if the bonus/conditions aren't satisfactory? – jmac Jan 15 '14 at 7:22
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    @Jmac - I think he means that the base salary is not enough. But that the bonus structure could make up the difference. – IDrinkandIKnowThings Jan 15 '14 at 18:28
  • The polite way to ask this is "Please could you tell me what 'annual incentives for performance' means?". Ideally ask if there is a formula, and how much an average worker would have made from these incentives last year. – DJClayworth Jan 15 '14 at 22:59
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Bonuses are typically tied to performance goals. However the rules how this is done vary greatly so it's worth asking a few questions:

  1. Is the bonus tied to personal goals, department goals, company goals or any mixture of the above?
  2. How is attainment determined? Are there written goals with pre-defined metrics or is it someone's subjective judgment?
  3. Is the bonus dependent on job grade?
  4. Is the bonus dependent on regular job performance or just determined separately through the bonus goals
  5. What's been the average payout (in percent) for people in your job grade over the last few years?

The last question is probably the most useful in determining how much you can expect and how variable the bonus may be. Its also a good idea to look at the financial health of the company. Companies that are rolling in cash have a much higher propensity of paying bonuses than companies that are struggling for survival.

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You would be silly not to ask, since it's part of your compensation. What was the average bonus for employees at your level for the past few years? What percentage of employees at your level received bonuses? What was the maximum bonus? The minimum? How are bonuses calculated?

  • Very good. Past bonus payouts are probably a good indication of what they'll be in the future. – user8365 Jan 15 '14 at 15:06
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It's totally standard to ask this question and expect an answer. A bonus that is cited in the offer as part of your potential compensation is something the company should be prepared to explain fully.

Things to ask:

  • How is the bonus delivered? Cash, stock options, stock grants?
  • What is the size of the bonus? Often they are relative to salary as a percentage.
  • How often are they delivered? Monthly, quarterly, etc.
  • What requirements must be met to receive the bonus? Often this is company goals that are beyond the purview of a single individual, so a big part of this is figuring out how aggressive these goals are and what the likelihood of payout is. It's fair to ask what the chances of payout were in the past and whether any part of the strategy has changed to make past results disconnected from future predictions.

It's even fair to ask to talk to the managers who make bonus related decisions to see if you can accept their criteria.

About the only thing you can't do is expect them to guarantee you the bonus. If they do that, be wary. A bonus is generally not a promise, it's conditional. So you really can't plan on getting it - the common advice is that you live within your promised salary and use any bonuses as additional income when and if they arrive. If that's not an option because of the lower salary, say so and be willing to decline the offer.

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