The Telegraph
Tuesday , January 8 , 2013
Since 1st March, 1999
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Bonus round

Indians are known to be optimistic about their jobs; once they have one, they assume it is theirs for life. They have a very high opinion about their performance too. They are always expecting that little bit extra from their employer — a promotion, a bonus or simply an extra coffee round.

It has become traditional in India to give bonuses during the festive season. It’s more than traditional; in several industries, it is statutory to give one month’s pay as bonus. This gives the excuse and the budget to splurge at such times. But it takes away all motivation from the bonus. Can something statutory be an incentive to work harder?

On the other hand, Indians have the fewest public holidays. According to a Mercer Worldwide Benefits and Employment survey, the UK has the highest number of workplace holidays — 36 per annum. (Ratan Tata was right when he spoke of lazy Britishers.) Other leisure-loving countries include Poland and Austria. India is near the bottom with 28. Incidentally, Indians are also amongst the most vacation deprived.

The trouble in India is that work and life are regarded as belonging to different buckets. This is true across the world. But only in emerging economies, where rural roots have not yet been forgotten, is work regarded as something alien to life. Farming was hard labour; but it was life. A job is necessary to make a living but it’s only a new generation of Indians that is internalising it. Most bosses belong to an older generation, however; they have to go before attitudes can change.

In the West, a bonus is essentially a reward for something you do over and above your normal duties. According to a WorldatWork report (see box), bonuses are in trouble. “Many would say that the economic shift in recent years has left little in the business world unscathed,” says the study. “Total rewards professionals have expressed the same concerns about bonus programmes... New findings suggest that although most respondents indicated a positive effect of bonus programmes on employee engagement, motivation and satisfaction, very few are consistently featuring bonus programmes.”

The most popular form of bonus is the referral bonus. There was a time when employees were not encouraged to recommend their friends and families for jobs in their own organisation. Today, kith and kin are supposed to be the best bets. For one, the referral comes from a person who needs to keep his own skirts clean; so you are unlikely to get a lemon. Secondly, most of the referral bonus comes after the new employee has settled in. If he proves to be a dud, you don’t get the money. Finally, this is another indication of the work-life merger.

Next in the bonus hierarchy is the sign-on bonus. This shows that even in these days of high unemployment, companies are willing to pay more for the right talent.

The spot bonus, which comes next, is most akin to the festive bonus in India. The reasons for spot bonuses are mainly special recognition, and performance above and beyond duty. They score in the high eighties in the WorldatWork poll. Project completion also features with a 72 per cent score but everything else is below 20 per cent.

The last major form of bonus — the retention bonus — is on the decline. Companies were asked if they were planning to introduce retention bonuses (if they didn’t have them). A whopping 92 per cent said ‘No’.

Bonuses work. They work best in the listed private sector (44 per cent). They also deliver in privately-held companies (33 per cent). Where they don’t is in the public sector (14 per cent) and nonprofits (13 per cent). But public sector and nonprofits bonuses — like in India where there is even a Payment of Bonus Act 1965 — don’t take performance into account. Crismus Bonus and its equivalents have an unwanted existence beyond Asterix comic books.



Bonus programmes in vogue in companies (%)

Referral bonus programme 60

Sign-On bonus programme 54

Spot bonus programme 43

Retention bonus programme 25

Source: Survey of Bonus Programmes and Practices by WorldatWork