Does offering financial bonuses help or hurt morale?

Question

In response to this question, David Thornley writes: "Offering a $1K bonus can also really hurt morale and make the team less effective. Don't do this without thinking it over very carefully. You can't measure contributions well enough to make it seem fair."

Does offering financial bonuses help or hurt morale?

If you have ever received a financial bonus, did it help or hurt the team's morale?

If someone else in your organization received a financial bonus, did it help or hurt your morale?

Related question: Building morale in the dev team

Answer 1

I would imagine it depends on several things:

1. How well the team gets along with each other
2. What the metrics are - easy to measure, fair, no disputes?
3. Are the bonuses public?

Answer 2

I haven't gotten a lot of bonuses (only been in industry 1 year), but our annual performance sharing bonus sure increased my morale. I've been working pretty hard to make some insane deadlines lately, and a few extra dollars would be pretty nice. I don't think it has to be money, but something tangible and useful to say 'thanks for your hard work' would really make me more likely to do it next time.

Answer 3

People are employed for a number of reasons and motivations, but almost everyone likes being paid. If a bonus is done fairly, correctly, and discretely, it can be an excellent way to motivate people.

Answer 4

If the goal is obtainable, it certainly couldn't hurt morale. A goal that is unreachable will lead to a loss of morale.

Answer 5

Financial bonuses often give a short term boost to productivity, but will ultimately hurt morale. The problem is that people will often use that as their motivating factor for doing their job. Eventually many people feel the current financial reward they receive isn't enough to garner the added effort, and in the event that bonuses can't be paid most will return to a lower state of productivity than before the bonus after they realize they aren't going to get one.

Answer 6

If it's something like profit sharing, where everyone gets a piece of the pie, then I say it helps.

If it's something like a "best programmer of the month" bonus, then it hurts it, since it's so hard to measure, there will be disagreements, etc.

Answer 7

I think the simple answer is, "It depends," as it shouldn't be too hard to imagine unfair bonus strategies that may create a more cutthroat and thus less effective teams. I'd also consider that there may be a diminishing return if the bonus becomes expected rather than truly something outside the norm.

I've received bonuses a few times now but they were generally a company-wide bonus, not something specific to my team or myself.

Someone else getting a bonus doesn't affect me unless it gets thrown in my face which may well irritate me and cause some passive-aggressive retaliation to try to mess with their mind. Most company's keep salary as confidential information so giving someone more of a raise than someone else isn't likely to become common knowledge but if it did then there may be a pissing match to see who can get the best boost that can impair the effectiveness of a team.

Answer 8

The key thought is to not pay people extra to do their job well.

If they're not motivated to do a good job without you needing to entice them, they're not right for your organization. You can't buy professionalism.

It's been my experience that doing a group event is much better than individual cash bonuses. (lunch out to celebrate, a movie, golfing, arcade afternoon.. or a office event does more to raise morale and bring everyone together -- you have a laugh, relax and things are good.)

Folks just want to be appreciated, in thought, action, and not just by throwing money at them (it is a nice gesture too though)..

Bonuses are fraught with pros and cons

Pros:

(+) People who do more should get to share in their hard work. Question is, how do you fairly measure and assess it across the board for tangibles and intangibles?

Cons:

(-) People who don't pull their weight might qualify for a bonus

(-) People might consider they are doing you a favor and expect even more bonuses for other things

(-) productive contributors will feel upset their contribution was hurt or went to others that didn't pull their weight

(-) people may wonder if someone got more or less of a bonus, or if someone got it at all

Answer 9

It depends. I work in the industry where large bonuses are norm. It is the lack of them which would hurt morale.