Bonuses

September 7th. 2006
Sent to but not published in the Toronto Globe & Mail

The information cited by Virgina Galt (Bonuses no longer just for executives, Glonbe and Mail, Sept 6, 2006; Page: C7) is quite perverse. She states that top management bonuses average 20% of salary, those for middle managers are about 15%, those for professionals are about 10% and those for trades people are about 7% and for clerical workers they are a meagre 5% of salary.

First, a bonus of under 10% is not very meaningful. So the bonuses for trades people and clerical workers will not have much motivational impact.

Second, differentials in compensation should be established with base salaries. After that, everyone should get the same percentage of salary as bonus -- either 100%, or 59% or 12%. After all, each has contributed in his or her own way to the success of the firm. Each should share proportionately in the fruits of that success.