Wednesday, March 25, 2009

Bonus Don’t Help

An interesting post from Mark Cuban on bonuses, and one that I think is pretty accurate. People tend to act in their own interests, for the short term, and don’t really have loyalty.

Why should they?

At least in the US, most people don’t see loyalty from their companies. It’s not that people are fired or laid off without thought, but they aren’t treated well. They aren’t necessarily appreciated, and they certainly don’t get their bonuses that often. At least not great bonuses. While executives often receive good bonuses, the rank and file, who contribute a great deal to the success of the company, don’t. I’ve seen plenty of cases where the bonus plan wasn’t met for employees, but executives were still well paid.

Setting a bonus plan is hard. Owners, executives, they do deserve to get more, but not an outrageous 10-20x more. They don’t really produce that much value. A bonus plan shouldn’t be a lottery.

I say let people go, find employees that want to work for you, pay them fairly, and build your business. Overpaying someone because you think they make a huge difference, is almost always, a mistake.

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