Performance Based Bonuses

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

Banks and credit card companies got sucked into lending more and more money without being realistic in the effect it would have on businesses. They learned that charging high interest rates allowed them to generate growth to meet performance bonus requirements.

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.

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