Definition of bonuscide:
Bonuscide is a term used to describe incentive schemes that progressively poisons an organisation by ensuring the flow of discretionary pay is non does not serve the organisations goals. These schemes can be observed in two main ways, the loss of key staff or the reduction in client/customer base.
Bonuscide becomes more observable during a major crisis (for example covid 19). Companies that practise this will create self harm by amplifying the fiscal impact of the crisis on a specific population of staff that are key to the companies success. For example, legacy organisations will tend to target skills that the board or exco don’t understand and disproportionately target its technology teams, whilst protect their many layers of management.
The kinds of symptoms that will be visible are listed below:
- Rolling downside metrics: A metric will be used to reduce the discretionary pay pool, but this metric was never previously used to as an upside metric. If at some future stage the metric becomes favourable
- Pivot Upside Metrics: If the financial measure that was chosen in 1) improves in the future; a new/alternative unfavourable financial measure will be substituted.
- Status Quo: Discretionary pay will always favour the preservation of the management of status quo. Incentives will never flow to those involved in execution or change, because these companies are governed Pournelle’s Iron Law of Bureaucracy.
- Panic Pay: Companies that practice bonuside are periodically forced to carry out poorly thought through emergency incentives to their residual staff. This will create a negative selection process (whereby they lockin the tail performers after loosing their top talent).
- Trust Vacuum: Leaders involved in managing this pay process will feel compromised, as they know that the trusted relationship with their team will be indefinitely tainted.
- Business Case: The savings generated by the reduced discretionary compensation will be a small fraction of the additional costs and revenue impact that that the saving in compensation will have. This phenomenon is well covered in my previous post on Constraint Theory.
Put simply, if a business case was created for this exercise, it wouldn’t see the light of day. The end result of bonuscide is the creation of a corporate trust / talent vacuum that leads to significant long term harm and brand damage.