Bad bonus practice…

A letter in People Management Magazine from Michael Rose commenting on “HR to have greater role in reformed City reward, 16 July 2009” stating that a guaranteed bonus is often agreed for the first year  of employment as part of negotiation with a prospective employee. Michael Rose of Rewards Consulting Limited then comments that it is thoroughly bad practice to have any guarantees after the first year and that it should not take a regulator to point this out. I completely agree with Michael Rose from an incentive view point. Bonuses are one of the main aspects of an incentive scheme’s and writing an “automatic” bonus in to an employee’s terms and conditions defeats the whole point of the scheme or potential scheme, which could very easily conclude in the business failing to reach several of the HR objectives. I don’t believe a financial bonus is always the best reward in an incentive scheme, much the opposite the reward should change along with an employee’s needs to be fully affective but a lot of bonuses and employees do prefer a financial award, therefore financial awards are regularly used and guaranteeing them to an employee will reduce the overall incentive scheme dramatically.