Consider the following;
In thinking about Larry’s plan, who does the plan appear to motivate? What about those who are not able to make the bonus anytime soon; does this motivate them in any way? Could there be a better way to design a bonus plan?
We looked at a situation in which Jane discovered that Larry, her co-manager, created and implemented a bonus plan that appeared to be custom-made for two employees, but almost impossible to achieve for just about everyone else. In looking at the plan, Jane noticed that it necessitated that sales team members already have established contacts in the field, existing customers whose orders were typically at a high level, and the experience and savvy to coax more sales from those customers. Since most of the sales force was relatively new, they lacked the existing customer base or sales expertise to qualify for this bonus. Jane mentioned this to Larry, who defended the plan by saying that he realized that almost no salespeople would qualify for the bonus right away, but he felt it was a strong motivator and that the newer folks would strive toward achieving the bonus over the next couple of years. In the meantime, he figured, those not meeting the bonus could watch Samuel and James’s interaction with their customers and hopefully learn from them.
Bauer, T. N., & Erdogan, B. (2012). Outcomes of organizational socialization. In C. Wanberg (Ed.), Oxford Handbook of Organizational Socialization (pp. 97–112). Oxford, UK: Oxford University Press.