Bonuses

[rodeosweetheart]

If a company cuts bonuses, do they tend to cut salaries or start laying off?

[bae]

The answer is specific to the circumstances of the company.

I've worked at companies where bonuses were tied to hitting certain goals (personal, departmental, or company-wide), and if the goal got missed, the bonus got zapped. No salary cuts or layoffs, unless the goal got missed so much the company itself ran into trouble.

I've seen companies where "bonuses" were an expected part of compensation just for showing up, and so cutting bonuses was essentially simply cutting salary.

My wife has worked at places where the bonuses were simply the divided-up profit for the year, no bonus meant the firm hadn't had profit, logically I could see where expenses might get cut further if the firm kept showing losses...

You need to step back and look at the company-as-a-whole and look at its health and business plan - don't get confused by shell games concerning how exactly compensation is handed out.

[lmerullo]

I assume the first step is cost cutting expenses. Then, cutting (eliminating) bonuses. Next would probably be up to the company - I would sooner cut salary and keep staff. If they lay off, then the workload still needs to be done, and that could result in higher costs if they need to pay overtime to get the production done.

My company cut salary when the recession hit, and has restored bonuses, but not raised / restored our salaries.

[catherine]

The places I've worked for were similar to bae's wife--not to be expected, and based on the profitability of the company the previous year. So, while it's tempting to come to expect bonuses, really, unlike Clark in National Lampoon's Christmas Vacation, people shouldn't really think of them as a given, in that circumstance at least. (I never went and ordered a swimming pool before bonuses were announced, that's for sure. In fact, I was so overwhelmed by my first bonus of $800 that I wrote a really emotional thank you note to the company partners.).

I wouldn't see cutting bonuses as particularly ominous, unless profitability tends to decline over the next couple of years as well.

[rodeosweetheart]

Thank you so much, everyone, this is really helpful--lots of experience here on these boards, and thank you for sharing your wisdom.

[lmerullo]

I've worked at companies where bonuses were tied to hitting certain goals (personal, departmental, or company-wide), and if the goal got missed, the bonus got zapped. No salary cuts or layoffs, unless the goal got missed so much the company itself ran into trouble.

^ This is the way my company handles bonuses... performance bonus, and it was eliminated in the lean times. We still had to strive to meet goal with no financial incentive to do so... except keeping your job.

My husband's company does the profit-sharing style of bonus, so if there is no profit there is no bonus. So, there is no cutting of this bonus type, as it's all purely profit / loss.

[awakenedsoul]

When I first moved here I worked at a high end health club teaching classes. I was there for 12 years. They put a freeze on raises (when I asked for one.) After that, they started cutting classes and laying off teachers who were paid well. They hired new teachers for half the price, and asked them to take their expensive yoga certification. The sauna, steamroom, and stereo were broken for months...(make that years on the stereo.) They eventually went out of business.

I could smell it coming. It took me forever to get paid. They made a lot of excuses. I hope your situation is different.

[rodeosweetheart]

Awakened, that sounds awful, and as you say, you could smell it coming.
This company (brother's employer) has now made a round of layoffs, but I do not know the extent of them.
This makes me wonder if it is more like the situation Awakened is describing.

[clara24]

I agree it is depends on the company ,cause i never been experience cutting a bonus or even a seen a news or [communications file] or read an article .By the way this is a good topic.



edited to delete commercial url hotlink.
Iris Lily

[ApatheticNoMore]

I've never worked anywhere where bonuses were a regular thing for non-managers. I think bonuses are mostly for management. I worked one place where non-management got bonuses but it was almost exclusively a reward for completing certain BIG projects (so there is no way we could think they would be regular - they were even called "project x bonuses").

The layoffs are the ominous thing. I've never seen a company cut salary (I think it would lead many people to quickly send out their resumes the day it was announced just out of spite - such is the modern employment relationship) but I've seen them cut staff and of course there's always much more stealthy salary cuts like not giving raises and cutting benefits like health care contributions. But even doing this doesn't mean the company is in financial trouble and is going to layoff, though it might, some companies can be record profitable and know that the economy is bad enough they don't have to provide much for the employees (don't ask me how I know), though it's probably not real encouraging. But I don't know how layoffs can be anything but a pretty bad sign ...

[sweetana3]

You have to keep a close eye on the place where you are working. Husband worked for a Fortune 500 company making drugs. Everyone should have known for years when the drug patents were going to expire. Husband called it Year X. But they kept on treating the company like it would be the same forever and spent money like water. Well, in one year 5000 people were laid off and it should have been a surprise to no one.

As awakenedsoul mentioned, keep your eye on spending and industry news. What is happening to others in the field? What is happening to the economy in your area and nationally?

It can happen even in the government. I told many people that with data being able to be shared from a more central site, no one was safe and many jobs could (and should) be centralized. Well, it came to pass and layoffs took place. (my actual comment was "Your job could be done in Puerto Rico. What are your future plans?)

[rodeosweetheart]

Yes, the layoffs seem much more sinister than the bonuses, although the employees are really feeling the cut of bonuses. Now no one wants to say anything for fear of being in the next round of layoffs, if they are indeed coming.

[awakenedsoul]

Sorry rodeosweetheart, I didn't see your response till now. The place I was teaching still has other locations, they just went out of business at their location here. They charged $80.00 a month, and couldn't compete with gyms like LA Fitness, 24 Hour, etc. I opened my own place, and had to close it after a few years, as well. Fortunately, I didn't lose money. Everything worked out for the best.

My approach now has been to audition for the best paying contracts. I like the people better, and the union pays well. I also have a side gig teaching at the senior center. It doesn't pay that well, but I do get 70%. The potential is there, if it keeps building. Also, they've given me excellent publicity on t.v. and in the newspaper. That's helpful, since now, everyone who interviews you googles you.

How's it going for your brother? It's not a bad idea to start looking. I actually really like auditioning.

[SOS]

In my case, it is more of a divide and conquer-thing.

So, some folks have contractual bonuses which are capped, and others, like myself have variable bonuses. Mostly it differs between a month or a month-and-a-half at the end of the year. So, all good, but I could be doing all sorts of side-projects and get a month, while a co-worker stares at her monitor all year also gets a month.

One of those things, I think.

[creaker]

My employer does annual bonuses, and they appear to be awarded very arbitrarily, as in they don't always appear to be tied to company performance. I'm sure there are reasons and strategies behind it, but other than the "this was a bad year so bonuses will be small" scenario, we don't get much information into how the decisions are made.

[Alan]

I get an annual bonus which is tied to annual performance reviews and the companies financial goals. There are two percentages tied to personal performance and a multiplier associated with company financial goals. This results (for me) in an annual bonus of approximately 10% of base salary, multiplied by an average of 1.5 to 2.