“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:

1(a) Examine The “Past”: First, Look to Factors and Metrics Identified by the Bonus Plan – If an annual incentive bonus is “discretionary,” it is presumably based upon generally accepted factors, including achievement of company goals, achievement of department goals, and achievement of personal goals, subjectively identified and subjectively evaluated. On the other hand, if an annual bonus is “formulaic,” it is expressly based on certain objectively identified and quantified goals which can be plugged into a formula and calculated.

Whether the amount of a bonus is arrived at subjectively or objectively, or even a combination of the two, we first look backward – that is, at the “Past” – and address if it might have been (1) arrived at in error, that is, due to a mistaken perception or mathematical miscalculation, or (2) it failed to into account appropriate factors and metrics outside of those customarily considered.

Said differently, (1) a bonus might have taken into account the “anticipated factors and metrics,’ but taken them into account in error, or (2) a bonus might have failed to take into account “unanticipated factors and metrics” that it rightly should have.

An example of a “subjective” measure wrongly applied in the determination of a “discretionary” bonus might be the employee’s performance review. That is, if an employee is described as an “Outstanding Performer,” surely he or she would most likely be entitled to a bonus that is at least as good as that granted to those who are categorized as “Needs Improvement.” Both are subjective, but the Outstanding Performer is presumed entitled to a bonus at least as good as a Needs Improvement colleague. Not perhaps by law, but surely by common sense.

An example of an “objective” measure wrongly applied in the determination of a “formulaic” bonus would be proper attribution of a major sale; if an employee, by herself, (a) identified a sales prospect within her sales territory, (b) solicited that sales prospect, and (c) produced a sale from that sales prospect that was supposed to be factored into her sales achievements, to give credit for that sale to another employee would seem in error.

These should be included in your written response to management as reasons for (a) reconsideration, (b) to be addressed by means of “alternative rewards, or (c) prevented in the future, as explained below in Section 4.

1(b) Examine “The Past”: Second, Examine Events and Circumstances Not Anticipated by the Bonus Plan – Quite commonly, events and circumstances arise at work that are not anticipated by the bonus plan, but should be taken into account when bonus amounts are decided.

What happened to Brandon, above, is an illustration of just such unanticipated events and circumstances: “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.” Each event was unanticipated by the his bonus plan, but each should have been factored into his bonus.

The point is that unanticipated changes are often (a) beyond your control, (b) not appropriately accounted for, or (c) even sometimes requested by Management, and in these events, and others, should have been factored into the bonus amount decision, but were not or were not done appropriately.

These, also, should be included in your written response to management as reasons for (a) reconsideration, (b) to be addressed by means of “alternative rewards, or (c) prevented in the future, as explained below in Section 4.

2. Consider the “Present”: Request (a) Reconsideration or (b) Alternative Rewards – Addressing the “Past” raises the reasons you believe your bonus was inadvertently lower than it should have been. Addressing the “Present” suggests solutions to that problem.

There are two general paths to solving the problem of the “Past”: (a) reconsidering, and perhaps correcting, the lower-than-appropriate bonus amount, and (b) considering an “alternative reward” going forward.

A reconsideration of the lower-than-appropriate bonus is based on (a) facts and metrics misapplied and/or (b) unanticipated events and circumstances. We usually, but not always, suggest that our client specify an amount that he or she finds appropriate. That said, there are many situations in which that is not advisable; it’s a close call and, ultimately, a decision based on your instinct as to whether it will ease or inflame the process.

By “alternative rewards” we mean other aspects of your employment relation that would improve your life, often without additional expense to your employer. These might include such items as (a) elevation in title; (b) additional vacation; (c) larger territory; (d) more staffing and/or administrative support; (e) tuition assistance; and (f) appointment to strategic committees.

To review a prior newsletter entitled “Bonus or Raise Disappointing? Consider These Alternative Forms of Compensation.” To do so, just [ click here. ]

3. Address the Future: Ask “How might we prevent this problem going forward? – We always counsel clients that “Your future is more important than your past.” If the only positive result of your efforts to respond to a disappointing bonus is to make sure it does not happen again, that in itself is a significant victory.

The essence of doing so effectively and without damaging workplace relations is to ask, in your own words, whether there is something you might do differently, better or more frequently that might help avoid the same experience in future years. It is a matter of eliciting suggestions, in effect, inviting feedback you can learn from, and ways to improve your contribution – and for you, most importantly, the perception of that contribution – going forward.

All clients share your probable concern: “Might this upset my manager?” The only answer is that written respectfully, and without accusation, blame or using any kind of “attack” language, a request should not upset any manager, at least any manager who is acting in good faith.

One great method to avoid a disappointing bonus is to take a moment in August or September to obtain and use our Model Memo to Set Your Bonus Expectations with Your Boss, just [click here.] Shows “What to Say, and How to Say It.Delivered by Email – Instantly!

4. How do we do this? Place Your “Past, Present and Future” into a Respectful, Written Appeal – We say this a lot, and it deserves being repeated here: “So long as a request at work has “Three R’s” in its presentation – (i) Respectfully presented, (ii) Reasonable in its amount or effect, and (iii) it has a Rationale that is focused on the benefit to the employer, there is little downside to making any request at work.

In this context, a respectfully written memo that (a) puts forward one, two or all three of “Past, Present and Future” rationales, (b) requests respectful reconsideration of the bonus awarded, or as alternatives, one or two “alternative rewards,” and (c) requests suggestions to avoid such disappointment in the future, is what, and the way, we suggest. It should stress that this is a problem that can and should be informally addressed and easily overcome.

Your bonus appeal letter to your manager should stress (i) this is not an expression of dissatisfaction with any aspect of the job, but an disappointment with this particular event, (ii) your continued loyalty to and appreciation for your manager, your job, and the opportunity to work with and for your company.

Would you like a Model Letter that shows you how? Use our Model Memo Responding to Disappointing Bonus. A favorite! Shows “What to Say, and How to Say It.™ Just [click here.] Delivered by Email – Instantly!

Standing up for yourself in the employment context is not an easy thing to do for most people. That said, growing to learn how to do so is a skill and quality you must – sooner or later – acquire to be treated fairly and not being taken advantage of. This is a great opportunity to both “earn and learn” at the same time, with limited risk of harm to relations.

P.S.: Want to learn more about workplace negotiating? Consider viewing our Sklover On Demand Video entitled “Can I Really Negotiate with My Boss??” Just sit back, relax, watch and listen. To do so, just [click here.]

SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. Negotiation and navigation of work and career issues requires that you think “out of the box,” and build value and avoid risks at every point in your career. We strive to help you understand what is commonly before you – traps and pitfalls, included – and to avoid the likely bumps in the road. Navigating and negotiating wisely when disappointed by a bonus is one step in that process.

Always be proactive. Always be creative. Always be persistent. Always be vigilant. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “rewards” and eliminate or reduce employment “risks.” That’s what SkloverWorkingWisdom™ is all about.

*A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.

Please Note: This Email Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.

Sklover Working Wisdom™ is a trademarked newsletter publication of Alan L. Sklover, of Sklover & Company, LLC, a law firm dedicated to the counsel and representation of employees in matters of their employment, compensation and severance. Nothing expressed in this material constitutes legal advice. Please note that Mr. Sklover is admitted to practice in the state of New York, only. When assisting clients in other jurisdictions, he retains the assistance of local counsel and/or obtains permission of local Courts to appear. Copying, use and/or reproduction of this material in any form or media without prior written permission is strictly prohibited. All rights reserved. For further information, contact Sklover & Company, LLC, 45 Rockefeller Plaza, Suite 2000, New York, New York 10111 (212) 757-5000.

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