[Xylakant]

> Not to mention that there will be no motivation among your employees to perform more than the absolute minimum work required to keep their job.

If that is the reason you pay a bonus, then you already lost. People will just do the minimum required to achieve he bonus requirements and will not keep the companies interest in mind. I’ve seen places where people prioritized stuff that was no longer in the companies interest, but made them eligible for a bonus.

You could just as well fold the bonus into the fixed salary and be better off in most cases.

[tssva]

If the requirements to acheive their bonus isn't aligned with the best interests of the company that is a failure of the company and not the employee.

[Xylakant]

It’s practically impossible to guarantee the alignment unless the bonus is a flat out share of the profits or paid after an employee has performed in an extraordinary fashion without any pre-written bonus agreement. But any kind of variable payment agreement might be in perfect alignment with the companies goals at its inception by runs a substantial risk of loosing the alignment over time. Company goals change over time.

It’s totally ok if you feel like a bonus should be paid to an employee for achieving something special, but if your employees do not go beyond the bare minimum that keeps them their job, you’re in a kind of trouble that a bonus payment cannot fix.

[cuddlypsycho]

That is what we have stock options for .. to align the best (longterm) interests of the company and the employees. It is much better vehicle to build value for both parties than a bonus culture.

[mmt]

I agree that's what stock options are for, but I disagree that, in practice, they have that effect.

I think it's important to differentiate between a "meanginful" share of the company and stock options in general. For the average engineer, joining after employee #10 where founder allocated 10% to an ever-diluting option pool, that doesn't seem likely.

Perhaps public companies' profit-sharing plans are closer to the mark, except that an individual employee is so much less likely to have the power to "move the needle" on profit that even that's questionable.