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Why Bonuses?

A study by IRIS about bonuses in Quebec's public sector

by Le Couac


At IRIS, we have recently finished a study about bonuses in Quebec's public sector. Not only did we look at figures from the six organizations we focussed on (the health sector, Hydro-Québec, Loto-Québec, the SAQ, la Commission des services juridique et la Société de l’assurance automobile du Québec); we also met with numerous employees and managers within these organizations. Our questions were simple: do your lives change any when either you or your bosses receive a bonus?

From those who receive bonuses, the immediate reactions were the same: “It's always nice to get a little something extra.” But what about after the initial happiness? Does it affect the way you work? Does it motivate you to work more, or harder? To go to work in the morning? On the part of managers, the responses were almost unanimous: “No, not at all. I like my job, which is why I come into the office; not whether or I get a three per cent bonus on my salary or not.”

Prevalent in the beliefs of managers, as much in the public as in the private sector, is the strange idea that everything is about money, all of the time. Of course it's important to have a good salary; nobody is denying that. But that doesn't mean that every dollar has the same effect on an employee that every crumb of cheese has on a mouse. For years, many writers have emphasized that motivation is caused by numerous factors. Money is one of those factors, but it's not always the most important one.

When we asked employees how they were affected when their immediate supervisors received bonuses, the answers were quite different. Here, we heard that employees at an SAQ branch were overworked during the holidays because a manager didn't want to hire new employees for fear of losing a bonus that depended on an unwavering overtime budget. We also heard about an intense work atmosphere at the Montreal Casino, where employees had the impression that bonuses were given out arbitrarily, based on whether or not they were favoured by the bosses.

This refutes the theory mentioned earlier, that motivation is simply a matter of a couple of dollars. However, offer a manager money to do something which will not affect them but only affect their employees, and there's a good chance that they will do it. Bonus systems reduce a manager's autonomy in relation to senior directors of a company, who believe this to be a more efficient way to direct them. Less autonomy often translates to less flexibility, attention and openness to suggestions from those who interact directly with the public.

Why, then, are bonuses in the public sector on the rise as the numbers have allowed us to confirm (reaching $105 million in 2008-2009 for the organizations we studied)? In part, by blind faith in a simplistic ideology about performance and motivation: a managerial theory imported from the private sector. And yet, apart from Hydro-Québec and Loto-Québec who refused to produce the documents we asked for, none of the organizations studied evaluate their bonus systems. How much do performance evaluations cost? Does general performance actually increase? Does the bonus system really motivate employees? Based on their responses, these organizations have no idea. Their adherence to performance-based bonus systems seem to be, from this point of view, an act of faith.

Act of faith, or a calculated decision by senior management? When we look at the bonus structure, in which salary percentages grow based on organizational hierarchy, we can certainly ask questions. In effect, these figures demonstrate that these bonuses accelerate the rate at which the salary gap between employees and managers increases. Under the guise of implementing bonus systems to “attract the best” to the public sector, we mustn't forget that these bonuses are primarily given to managers already in place, despite the lack of any distinguishable positive effect. As for bonuses given to employees, we have the impression that it's an attempt to save money during pay negotiations. A small three per cent bonus might seem like a decent increase during negotiations, but it could very well turn out to be disposable when times are tough.

If the actions of specific senior managers in the public sector can explain the emergence of performance-based bonus systems, we should ask ourselves why society should accept this policy. Because, as published by American researchers who studied this question, it could be that a supervisor is happy to give out bonuses to an employee who fulfills fixed objectives. It could also be that the employee is happy to get a bonus by continuing to work as before, and that everyone wins under this system. Everyone, except the society which finds itself paying extra for bonus systems without any significant positive consequences.

by Simon Tremblay-Pepin, Researcher at IRIS

translated by Nat Gray

version francaise ici


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