The concept is good but in practice it has been proven to not work. People have done whatever it takes to get performance based bonuses. This has included falsifying documents, fudging the numbers, creating shell companies, ponzi schemes and hiding losses to just name a few.
Energy
Oil industry did whatever they had to to hit bonuses in the 1970s. Some even went so far as to dump tankers of oil in the desert to create a shortage of fuel. The direct result was higher prices to the US public. Then we had Enron and the games their employees played. Bouncing electricity back and forth between different states creating a false shortage to increase prices. California has paid outrageous power prices created by those bonuses.
Real Estate
Realty agents and realty appraisers started inflating property values so they could get a more money from their sales. It took a few years before sub-prime mortgage companies appeared on the scene to get their share of performance bonuses. The outcome of these performance bonuses is hundreds of thousands of consumers with mortgage that are underwater.
Banks & Credit Card Companies
The average consumer has been the loser when it comes to bonuses based mainly on performance. There needs to be some form of checks and balances when it comes to employee bonuses. Limiting the amount would be a good first step.
1 comments on "Performance Based Bonuses"
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As someone who used to strive to hit food cost and expenses (among other things) to make bonus, what do you see as solutions to this problem. I agree, that the BS bonus program that most companies use is, in the long run, hurting us, the consumer. But, it won't operate in a vacuum. We need solutions and viable changes.
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