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« #33 with a bullet | Main | Fresh Fish Here »

Q: What sort of bonuses should we pay?

A. "It's not about the money."

Usually, when people say this, they are lying.

Except, it turns out, at work.

Money, it's been shown time and time again, is a demotivator. I'm not talking about a fair or even generous salary. Being a cheapskate is no way to find a great employee. But once people have joined your team, incremental money--bonuses and the like--usually demotivate people. They demotivate because sooner or later, people feel as though they're being treated unfairly.

One guy gets a $10 bonus. The person sitting next to him seethes for weeks, while the bonusee forgets it soon enough.

A sales rep gets into a fight about a commission... and remembers it long after the moment is gone.

People who really and truly love their jobs are in every single industry. And people who do great work because they love their jobs are paid at every salary level. What they have in common is a boss that gives them respect and freedom and responsibility. A boss that listens when they have something to say. Which, not coincidentally, is exactly the way the best companies treat their customers, too.

Cutting your prices doesn't build customer loyalty, and paying a bonus doesn't build employee loyalty.

If I had money to spend on a bonus, Mr. question writer, I would invest it in allowing each of my employees to try a small project (Google style) with no strings attached. Giving fairly-paid people your trust and the freedom to grow is worth a lot more than $50.

[n.b. all bets are off when the topic is sharp-edged salespeople. Just as some stores (woot, for example) work hard to attract the money-focused shopper, there are some jobs where a razor-sharp commission structure is exactly what your people--and you--want.]

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Listed below are links to weblogs that reference Q: What sort of bonuses should we pay?:

» The Demotivation of Money from LandingTheDeal
It's an interesting idea shared by Seth Godin today: Money, it's been shown time and time again, is a demotivator. I'm not talking about a fair or even generous salary. Being a cheapskate is no way to find a... [Read More]

» Q: What sort of bonuses should we pay? from WebMetricsGuru
Seth Godin asked and answered two questions that are key to customer satisfaction / loyalty and employee satisfaction /loyalty. Cutting your prices doesn't build customer loyalty, and paying a bonus doesn't build employee loyalty"... [Read More]

» What Kind of Bonuses? from GoodRecruits
To me, the most-important element to create this is clear requirements--given in a constantly/publicly accessible format--at the beginning of the definite qualification period. These requirement ... [Read More]

» Seth Godin Knows Business, That's For Sure from CustomersAreAlways
No amount of money will give you respect from your employees if you don't value what they have to say. It would be as if you were bribing them for their love... [Read More]

» Money- A Factor of Demotivator from Meshio.Com
How truemoney is often the main ingredient in creating havoc and unrest in an otherwise peaceful working environment. Thats why, the rule of thumb is never reveal your salary, not even to your closest colleague... [Read More]

» Loyalty is Loyalty from Marketing and Management Update
Q: What can your HR department learn from Marketing? A: What your Marketing department can learn from HR. Huh? In a nutshell, People who really and truly love their jobs are in every single industry. And people who do great work because they love thei... [Read More]

» Links Worth Posting About from Chasing the Wind
Two entries from Seth Godin: a writer who constantly has good things to say while saying them very briefly. I appreciate people that don't waste my time with unnecessary words. Post 1: Bonuses What sort of bonuses should we pay?... [Read More]

» What's the Big Motivator? from Thoughts from a Management Lawyer
What motivates employees? What can companies do to retain top talent? Apparently it's not throwing more money at them (though, in fairness, some people seem singularly motivated by money). What motivates people is engagement. According to Seth Godin in... [Read More]

» Why Bonuses Work from Whatnot At Work
Contrary to marketing guru Seth Godin's opinion that bonuses don't motivate, there are many situations where bonuses are exactly the right tool for motivation. Seth states:But once people have joined your team, incremental money--bonuses and the like--... [Read More]

« #33 with a bullet | Main | Fresh Fish Here »