The executive bonus has become a somewhat controversial topic in recent years and, in some countries, even the rallying cry for those wanting to apportion blame for the causes of the Global Financial Crisis.
However it is not just the "Wall Street investment banker" who is the recipient of remuneration outside the traditional monthly or fortnightly salary payments. Many, indeed most, executives today receive some form of bonus remuneration as part of their total compensation.
The original objective of the bonus system was as a means of incentivizing performance by motivating excellence in terms of employee output. However, increasingly bonuses are associated with motivating other than excellence — the reward itself has become the motivation.
At best many would argue that bonuses seem to be delivered merely for "turning up" rather than for delivering excellence. At worst they can actually incentivize "selfish" behaviour which may be contrary to the long term best interests of the organisation or its stakeholders.
In the hunt for the best and brightest, many organisations have convinced themselves that high bonuses are necessary to attract the best talent, despite the fact that contemporary research does not necessarily support this view.
While we are not advocating the removal of bonuses, indeed this would be extremely difficult given how they appear to have permeated the executive mindset, nevertheless there are a number of ways suggested to improve their effectiveness:
You might also be interested in:
IRC’s Asia Pacific (APAC) member firms and guests gathered in Singapore for its March 2018 C-suite roundtable themed “Leadership Transformation: Strategies in a Disruptive, Uncertain and Digital World.” IRC explored how different variables impact leadership in APAC, a dynamic region characterized by one of the higher growth rates in the world.
Leaders across the world seek to answer the question: What are the types of Talents required to thrive in the Innovation age? What criteria can we use to choose a Buy, Build or Borrow strategy to acquire innovative talent? What is “innovative talent” to begin with?