Business and Bonuses

What business needs to remember is that relatively small bonuses, of any sort but I'm going to speak primarily about money, make a big difference to the grunts who work the trenches.

When the company does well, typically the top excecutives give themselves large bonuses, frequently equal to thousands or millions of dollars. Let's say that one of the top execs earns a $1 million bonus for a year. If you take that top excecutive's $1,000,000 bonus and instead give it to the, say, 700 people who made the company go, you could give each of those people an approximately $1400 bonus. For most of these workers, this will be somewhere between half and one full paycheck's amount. To these 700 people, this amount is a significant bonus and worth striving for, whereas for someone who already makes millions of dollars a year and has all the nonmonetary perks of being a top executive (stock options, golden parachutes, company car, etc.), the $1 million bonus is not nearly as significant. The same amount of money spread out among more people will help your company more and have a greater positive impact in the long run.

When I hear stories of Micheal Eisner getting a $20 million bonus in a year that Disney was actually down, I cringe. I think to myself, "I wonder how far that $20 million would have gone if that poor schmoe wearing the Pluto costume got $1000 for HIS hard work?" Of course, if it was truly a down year, then no one should have gotten a bonus, least of all one of $20 million.

Now, I'm not down on top executives by any means. They have generally worked hard and sacrificed much to be in those positions. But those positions come with the large salaries, the company perks, stock options, and the like. They are like the spark plugs of an engine-- without a spark, the engine just sits there. But you only need that spark occasionally; from then on, the pistons and valves do the majority of the work. Without the pistons and valves, that spark does nothing more than cause a fire; the pistons and valves translate that fire into usable energy by turning the driveshaft and making the car (the company) move. To continue my car analogy, getting gold-plated spark plugs is nice, and can improve your car's performance a little, but making sure the pistons are properly lubricated against friction can make the difference between your engine running or not. Think of solid, quality bonuses given to the grunts as the lubricating oil that keeps those pistons running smoothly and consequently makes the car move forward.

It is more true that the schmoe wearing the Pluto outfit does more for the Disney corporation on a day-to-day basis fulfilling the fantasies of the parents and children that show up at their theme parks than Michael Eisner did in his role as CEO of the corporation. Without a product and the people that build and sell that product, no CEO (or other top exec) has a job.