Ten ways to tell someone they’ve got a bad bonus

If you’re in charge of dishing out bonuses to your team, you may have a bunch of unhappy subordinates on your hands. Your bank is probably cutting bonus pools – especially if you're at the likes of Barclays or Morgan Stanley – leaving you to break the bad news to your team. Some may quit right away if they receive a low payment (or no payment), while others may bury their anger and walk out on you later when the market picks up.

1) Don’t let others do your dirty work

As a line manager, you know the people who directly report to you better than the people in human resources or senior leaders. So stay in control of their remuneration; don’t discover your firm’s bonus agenda at the last minute. “Managers need to play a significant role in communicating about compensation with employees,” says Professor Sattar Bawany, managing director of the Centre for Executive Education in Singapore. “Understand your company's philosophy towards bonus allocation.”

2) Use appraisals to your advantage

Appraisals are the prime time to manage bonus expectations, advises Wendy Heng, a manager at Robert Walters Singapore. “If their performance is below expectations, prepare the individual for a bonus which will reflect that. Do likewise if the company or team have not been performing,” she says. “It’s best to be factual and draw links back to performance. The reaction will generally be okay if expectations have been managed upfront.”

3) Keep consistent

Keep your bonus message the same until announcement time. Changing tack makes it seem like you don’t even know the company’s approach yourself; nobody likes a manager who isn’t in the loop. “I think I have communicated expectations well to my team,” says Choo-Guan Yeoh Singapore head of equities for UBS. “They completely understand me because I’ve been consistent. Consistency is the key.”

4) Get it done early

On the day of the bonus meeting, avoid staff stewing about their potential payments for several unproductive hours. Talk to them in the morning, if possible, says Marc Burrage, regional director of Hays in Hong Kong.

5) But don’t rush

“It’s an important discussion, so schedule enough time in advance for an uninterrupted, private, one-on-one meeting,” says Andrew Chan, chief administration officer, Singapore at Threadneedle Investments. “Always do an extensive review beforehand and have examples of where they did a good job and where they could improve.”

6) Make it personal

Measuring employees against their own personal performance criteria will then allow you to objectively rank them against others, says Tony Latimer, an executive coach at the Asia-Pacific Corporate Coach Institute in Singapore. “If you did 120 percent of your KPIs (key peformance indicators), for example, you performed better than someone who only did 110 percent of theirs,” he explains. “Allocating the bonus pool this way avoids the negative impact of bonus comparison. Making achievements visible and transparent is healthy. Letting people see how they are doing compared with others will spur on the achievers.”

7) Talk around the bonus

Money may be the main reason for the meeting, but highlighting other career issues, such as promotion and training opportunities, helps ensure that team members see the benefits of working for your company, says Burrage from Hays.

8) Encourage feedback

Unless your expectation management has been faultless, not all your staff will be happy with their bonuses. Let them express their concerns, says Sabiha Vorajee, CEO of career consultancy Empowered Woman in Sydney. “By getting comments from their team, managers have the ability to feed that back up the chain to senior leaders and HR, so communication can be better the following year.”

9) But don’t react if they get upset

Some employees may become emotional, but you should stay calm and come armed with evidence to support the bonus decision. “Avoid being drawn into a heated discussion should the individual react negatively,” says Heng from Robert Walters. “Always have the appraisal on hand, too, in case you need to refer back for specific examples.”

10) Go back to the future

Don’t close the door on dialogue after the bonus announcement. Next time you meet, discuss the recent bonus again, but also plan for the year ahead. “Reviewing the rationale behind the bonus is helpful, and offering a follow-up meeting reduces emotions from any disappointment,” says Tom Algeo, director of Sydney career consultancy Value Oriented People. “Hope for the future is a very human trait, so concentrating on the upcoming performance period provides an opportunity to shift towards possibilities for a satisfying bonus discussion in future.”