Published on March 3rd, 2015 by Alan L. Sklover
“When you permit disappointment to fester in your soul, it often leads to discouragement.”
- Joyce Meyer
ACTUAL “CASE HISTORIES”: Brandon, 42, was a Software Sales Manager for a large software firm headquartered in St. Louis. He worked from his home in Northern New Jersey, responsible for managing salespeople located in four states. His compensation consisted of a modest salary, but a significant bonus opportunity, which was based on a seemingly simple formula. Determining Brandon’s annual bonus was a simple matter of calculating the year-over-year increase in sales in his territory, and applying an agreed percentage. Or so it seemed.
In the previous year, certain unexpected events made calculating Brandon’s bonus not so simple a task. First, in February, two of Brandon’s star salespeople resigned after booking large orders. Then, in May, his territory was adjusted by taking away Connecticut and adding Vermont. In August, Brandon was asked by the CEO to manage a company-wide effort to roll out a new software product – which took a lot of his time and attention – after being assured his efforts would not result in a lower bonus. In November, a large client moved its headquarters from New York to Texas, removing it from Brandon’s territory.
In March, when Brandon was told of the amount of his annual bonus for the previous calendar year, Brandon was sorely disappointed. It was far lower than he had expected because its calculations did not include the effects of the unexpected events.
Brandon came to us for help in resigning from his job, even though he did not yet have another one. He felt fooled and foolish. Instead of helping him choose between the alternatives of underpaid or unemployed, we counseled him to seek a third path: resolving the problem, that is, to remain employed and be fairly paid. He did stay, and he did try to solve the problem. To his satisfaction, (a) he received a supplemental bonus, (b) he was granted an additional week of vacation each year, and (c) he and his manager devised a plan to ensure that he would not be short-changed in the future.
LESSON TO LEARN: Annual incentive bonuses generally come in two varieties: (a) “discretionary” (based on subjective factors), and (b) “formulaic” (based on objective metrics.) Whichever type you may get, chances are that sometimes you may be disappointed. There are better ways of redressing the problem, and over time we have come upon one way that we have found works better than others. We refer to it as “Past, Present and Future.” Read on and you’ll see what we mean.
WHAT YOU CAN DO: To address bonus disappointment, in almost all circumstances we suggest a focused, respectful and effective appeal to either the client’s manager or an executive further up the chain of authority, presented by means of an email, addressing three themes. Here are the three basic elements of the “Past, Present and Future” method we default to when helping clients who have received disappointing annual incentive bonuses:
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