what’s the etiquette of getting a bonus?

Share on Facebook0Tweet about this on Twitter6Share on LinkedIn3Share on Google+0Share on TumblrDigg thisShare on StumbleUpon0Print this page

A reader writes:

I am only a few years out of school, working my first long-term job. I’ve recently been doing some above-and-beyond work for my employer, and a senior coworker mentioned that this sort of work is often rewarded with a bonus. I’ve never received a bonus before, and I’m hoping you would be willing to discuss a little Bonus Etiquette 101.

Am I expected to write a thank-you note for the bonus, or is an in-person thank-you enough? Am I allowed/expected to discuss it with coworkers, or is it taboo like salary? If I accept the bonus, does that mean this work won’t be considered for my next raise? Bonuses aren’t supposed to be negotiated like salaries, are they? For what it’s worth, bonuses aren’t discussed in our HR documents, so I don’t think my company has any official policy on bonuses.

There’s some variety in how employers handle bonuses, but in general here’s how they work:

* You do not need to write a thank-you note. (Remember, the idea is that you’ve earned the bonus; it’s not a favor or a gift.) However, you should thank your boss in-person for recognizing the work you did. A thank-you is good so that you don’t come across as if you’re unmoved by it or that you take it as par for the course; show you appreciate it, and you’re more likely to keep getting them.

* There are some offices where it’s normal to discuss bonuses with others, but plenty where it’s absolutely not. Err on the side of assuming that you shouldn’t, unless you see otherwise in your workplace (although even then, I still wouldn’t go around talking about it, but I’m private about that stuff).

* Generally speaking, work that earned you a bonus should still be considered for your next raise — in that it contributes to an overall picture of how you’re doing. Keep in mind that raises aren’t generally tit for tat — “you did project X and Y so we’re giving you a $5,000 raise” — but rather about your performance as a whole. Bonuses are more often linked to specific performance measures (“you wildly exceeded your sales goal”) or events (“you spent three months working crazy hours to make sure our conference was a success”).

* You don’t typically negotiate a bonus, unless it’s part of the overall compensation structure that you’re negotiating as part of a job offer. A bonus is generally a way of saying, “Hey, you’re doing a really great job.” If I gave someone a bonus and they tried to negotiate it, I’d be really turned off — don’t do that. (It’s fine to negotiate your salary itself though, at whatever point that discussion happens.)

By the way, for your own happiness and job satisfaction, don’t assume you’re getting a bonus simply based on what your coworker said. She might not be right, and if you start expecting it, you risk being disappointed or even resentful if you don’t. So don’t get too focused on getting this, and let it be a nice surprise if it happens.

{ 38 comments… read them below }

  1. Bob G

    Yes! Please listen to AAM’s advice and do not count on this bonus until you actually receive one. I’ve seen too many people 1. spend a bonus before they receive it and then never get one or get one for less than they expected 2. Get mad that a bonus never materialized, even though it was never promised.

    Keep in mind that the co-worker said “…often rewarded with a bonus…”, not “always”.

    Having said that make sure you get all the credit you deserve for the work you’ve been doing, especially at salary review time.

    Good Luck…I hope you do get rewarded with a bonus.

    1. Natalie

      Spending a bonus before you get it seems especially risky since a huge chunk will be taken for taxes.

  2. LM

    This actually touches on a larger issue I’ve been having to work through with the folks I manage lately: there is a difference between a “bonus” in the way that it’s being described here and an “incentive plan.” An incentive plan is written out, explains exactly what you have to achieve/do in order to earn X amount of additional compensation, and provides more guidelines generally around what has to happen in order for you to earn what my team insist on calling their “bonuses.” In my mind (and please, tell me if this is wrong), a “bonus” falls more under the heading of “you did this really amazing thing (or overachieved like crazy on X goal), so thanks a lot and here’s a small pile of money.” An “incentive plan” is something we give you before you done anything impressive, to tell you exactly what you can do to earn a small pile of money. Yes, at the end of both of those you still wind up with a small pile of money, but the path to get there is very different.

    (also, I think there may be some words accidentally missing from the very end of AAM’s response.)

    1. Helena (OP)

      The jelly-of-the-month club was quite literally the only thing I knew about bonuses when I asked this question. Thanks for the answer, Alison! It’s interesting to hear how different companies do things. And no, I don’t expect a bonus and I won’t be disappointed if I don’t get one, I just didn’t want to flub the situation if I did.

  3. Steve

    I once awarded an end of year bonus to an employee who came to see me and was upset. He felt that the relatively small amount ($500) should have been included in his base pay increase instead of being a one time payment.

    I listened politely but privately resolved to never insult him in this fashion ever again.

    1. Jamie

      That’s so strange. Why would anyone prefer $9.62 a week before taxes to a lump sum of $500?

      Speaking of taxes, if the OP gets the bonus remember to ask HR how they are pulling the taxes. IIRC (and I may not, don’t take my word on the figures) they can either tax it at your regular rate, adjusted for the additional money for the period in which it’s paid or at a flat 25%. So if you’re paying more than 25% and they do it at the flat rate you’ll need to make up the difference on your income taxes.

      1. Ry

        I’m not an employment lawyer, but I’d guess a lot of this bonus-vs.-base-pay stuff has to do with how retirement is calculated.

        My institution calculates retirement pay based on an employee’s five consecutive highest-paid years, and bonuses do not count toward that total. There’s also similar Social Security issues that I will freely admit fly way over my head, but I know they exist.

        This employee may have wanted the $500 to factor into his eventual retirement/pension pay, if such a plan exists at Steve’s institution.

        1. Jamie

          That is a really good point – I didn’t even think of that.

          I’ve never worked at a place with a pension program like that – just 401Ks – but that makes sense.

      2. Joe

        Aside from the pension issue, there’s also a question of longevity. If the guy stays there for less than a year, then he’s better off with the $500 lump sum. But if he expects to stay there for several years, than that $9.62/week comes out to a lot more than $500, especially if regular raises are calculated as percentages of current pay.

        That said, the guy is a yutz for complaining about a bonus.

    2. Scot

      Steve,
      Thank you for your anticipated time and insight to my question.
      I have been working at this company for 6/mo’s and only received a $2500.00 “annual” bonus – - I was with them 5 years before the first time. I’m pissed off and this to me is an insult when I have more responsibility and importance for the company than those who received $15,000.00 or MORE! Yes, one should be thankful, but when there is such a disproportion – - $2500 -vs- 40-70K for the upper bonuses…..should I NOT feel unappreciated ?!?!?!?
      FYI, I did NOT accept this insult/bonus stating, “if the company is obviously in such financial hardships, as representative of this amount, I feel it needs the money more than I do.”
      P.S.
      I won’t expect any future bonus-attempts now either – lol.

    3. Karen

      Well, I work at a small law firm as a legal assistant and have been here for 22 years. I have been receiving the same year end bonus for the past 10 years of $750, which is less than a week’s salary for me. My boss is a multi millionaire and for some reason, no matter how hard I work during the year, he never increases my bonus and it hurts me deeply. I ‘m struggling financially because I have not received a raise in 7 years due to the recession, etc. however, when things picked up substantially the past year and a half I asked for a raise and I did get one, not a large one, but a cost of living increase. It has not really helped make a dent in my financial situation, however, a larger end of year bonus would help me greatly. He is so cheap though and just doesn’t get it. He is out of touch with us middle class workers.

  4. Nev

    Sorry, OP, but from letter I didn’t get if you got the bonus, was promised the bonus by your boss, or just dreamed about one based on your co-worker’s comment. If you didn’t hear anything from your boss so far, if I were you, I’d be proactive and initiate a conversation where I would ask if there’s a company’s bonus policy and if cases like yours (obvious over-achievement) could be rewarded financially. Never hurt to ask if you do it in the right way.

    If your boss says yes, then of course you should thank her both at the end of the conversation and after receiving it (no matter how much exactly the bonus will be (no ability to negotiate if there is no formal policy). If you boss says no, then I would ask additional questions trying to establish if any of my actions could lead to a bonus in the future or to a salary raise. In all circumstances, this is between you and your boss and I would never discuss money matters with co-workers (but again, as Alison said, this is personal choice).

    About the promotions – if I were you, I would decide whether to request a salary raise or a position promotion based on my overall performance (systematically exceeding or just good), the company’s policy and traditions, and on measuring how I stand compared to my colleagues, their performance and their career advancement. If at the end of the year this is the only project you can brag about, you would not expect promotion (assuming you had already received one time bonus).

  5. Blinx

    At my old company, the annual bonuses were awarded by a highly-guarded secret method, and amounts were not discussed.

    However, rewarding individuals for going above and beyond on successful projects was usually done in public at staff meetings throughout the year. This way, you were recognized in front of your peers. There were two levels of these ad hoc awards and everyone generally knew about how much the award was worth, but it was not publicly stated. These awards could come from your boss, but more often came from colleagues/managers in different departments that you collaborated with.

    When you summarized your work history for your boss before your annual raise, it was nice to include these awards. However, these awards were unpredictable. If you felt (or if a coworker hinted) that you deserved an award for a certain project, many times you didn’t receive one. And then, out of the blue, you’d get one for a project that maybe you thought was run-of-the-mill.

    Do your best, expect the least, and be thankful for whatever you get.

  6. Malissa

    You mean the proper etiquette is not to dip yourself in gravy and run naked into the street shouting Hallelujah?

      1. Joe

        I opt for wrapping myself in bacon. But maybe I should dip the bacon in chocolate first, now that you mention it.

  7. Jen

    I’ve found there are a few interpretations of the word “bonus” – it depends on which one you’re getting.

    1. An annual gift that most people in the company get, usually around the holidays (can take the form of some extra cash, extra paid time off or a turkey – see “National Lampoons”).

    2. A gift someone gets after a job well-done. Not given to everyone (or even most people) in the company, and tied to a project or period of “above and beyond” work, rather than a season. I’ve seen these in the form of cash, time off, or a gift that ties to the employee’s likes (like running gear for a runner, kitchen gadgets for a hobby chef, etc.). Sometimes given privately, sometimes given publicly at team/staff meetings.

    3. An annual (or semi-annual, or quarterly) cash payment tied to individual and company performance, usually calculated based on hitting revenue targets. It’s given to all employees as part of their compensation package, allocated as a percentage of the employees’ salary and modified according to individual performance ratings (best performers get a higher percentage of their salary as the bonus).

    In all cases none of these should be expected and the appropriate response upon receipt is a genuine, in-person thank-you. And the only one you can even think of negotiating is the last one (and it depends on whether the company has a bonus program in place already).

    Congratulations, though, for winning the accolades of at least your colleague! Hopefully it travels up the chain for you.

  8. Z

    It doesn’t sound like the OP supervises anyone yet, but for those who do, it doesn’t hurt to spread the wealth of the bonus around. My brother is a lawyer, and when he gets a bonus, he takes a certain percentage (I’m not sure how much, but I’m guessing maybe 10%) and passes it on to the paralegals who assist him throughout the year. The paralegals have indicated that he is the *only* lawyer at his firm who thinks to do this, and they’re very touched by the gesture.
    (I think the bonus is type 3 in Jen’s description above.)

    1. A Bug!

      That’s very thoughtful of your brother! That’s a very sincere way of showing his assistants that they contribute to his success, especially when he’s not doing it out of a feeling of obligation.

    2. class factotum

      Yes. I did this once when one of the major reasons for my bonus was the success of a project that I had not done all by myself. The project never would have worked without the contributions of some more junior people who did not get bonus. I went to the bank and got new $100 bills, wrote a note to each of the three persons, tucked the money inside, and gave it to them. Because it was a really crummy bonus year, this did end up being about 10% of my total bonus before taxes. But it was worth it. These people were all gold.

      1. Ry

        This is so good of you and of Z’s brother.

        I have nothing to contribute to the bonus discussion, OP, except “don’t look a gift horse in the mouth,” which is to say, even if you got a bonus of $50 you should say thank you, even if you don’t think it’s enough. (I don’t get bonuses. Everyone in my clinic gets a gift card from our director for our birthdays – not tied to performance, just tied to… having managed to retain a pulse for another year, I guess? It’s a very small amount, but it’s terribly sweet of her, it’s out of her own pocket, not the clinic budget, and I’d feel like a terrible person if I didn’t thank her, even though it’s not much money.)

        But I’m typing anyway because the concept of sharing your bonus seems so… foreign to the nature of capitalism, and I love it that Class Factotum (ha! relevant name) and Z’s Brother are so conscientious. You get gold stars, or +1s, or something, for being so awesome. Now I dearly want to be in a position someday where I can surprise my future underlings by doing this for them!

  9. Charles

    There are some offices where it’s normal to discuss bonuses with others, but plenty where it’s absolutely not. Err on the side of assuming that you shouldn’t, unless you see otherwise in your workplace (although even then, I still wouldn’t go around talking about it, but I’m private about that stuff).”

    Ditto that part in the parentheses! Even if the rest of the staff is talking about their bonuses, other than to say how nice it was, I usually don’t add anything else.

  10. Henning Makholm

    I’ve worked at a place where word came down from the board of directors that they’d like to see a larger fraction of everyone’s compensation to be paid in the form of bonuses. My boss apparently didn’t think that could apply in a traditional way to the work we did in my department — he basically sat me down and said, “I don’t have a budget to give ordinary raises this year. But I can offer you a recurring monthly bonus of so-and-so much for keeping up the good work”.

  11. Andrea

    My husband gets quarterly bonuses based on his billable hours or certs or performance and something…I’m not actually sure what it is based on, except that it is more than one thing. He’s an IT consultant (he does storage/virtualization). Anyway, the bonus amounts vary, but they are generous. He makes it a point to thank his boss every time and to say how nice it is that his contributions are rewarded in this extra way. His boss let it slip one time that he is the only one who ever thanks her, but that some others regularly bitch about not getting a bonus as big as before. Apparently some people try to determine who else got raises and the amounts, too, and then they complain about that. I can’t imagine a scenario where that would be acceptable.

  12. Jamie

    I’ve experienced both types of bonus structures, given at the managers discretion at year end and where they are included in the compensation package where it’s part of the contract. In that case as long as the company made X profit, we would get a percentage based on pay grade in increments based on our metrics.

    Neither are gifts, but the second type is definitely part of the comp package as it’s within the employees power to get a defined amount.

    I know some people feel all salary things should be transparent, but I would caution against discussing your bonus with anyone. Typically not everyone will get one, and those who do will be in varying amounts. There is nothing worse than being thrilled with an extra 10K (or whatever) at the end of the year and then being bummed when you hear Joe in the next office got 15. It shouldn’t, but it totally dampens your happiness over what you received.

  13. Mike

    I think it’s a good idea to know about possible bonuses before start working for a new company. Bonuses may increase your satisfaction from the job.

  14. Kathy

    What if you give an unexpected 2 weeks notice. Follow it up saying you don’t want to leave them in a bind but would be willing to work a few hours on weekends for a few months to help out. Then to add, that is provided it was understood that your time would be compensated and you would STILL be receiving your bonus in a few months. Your thoughts on how you would feel about that employee.

  15. joe

    My company has issued bonuses at the end of every year and again in March for many years. However, this year nobody received a bonus for the year’s end with no inclination as to why. Should the fact that many employees are upset they didn’t receive anything nor a letter explaining that we would not, push one to give the boss a “heads up” that the morale of the employees is low and they are looking for answers?

    1. Scot

      Hi Joe,
      I too had a question surrounding bonuses this year and someone in business, professional business, told it to me like this and it just FINALLY made sense to me. Bonuses are something that are distributed at the discretion of the employer and should NEVER be thought of as guaranteed, an absolute, and in nearly every case is non-negotiable. If say one employee receives 40K and another deserving employee 2.5K, those bonuses and their breakdown-distribution was and is 100% at the discretion of the employer on all accounts surrounding the bonus.
      The point here, whatever happens surrounding a bonus is SOLEY the employers discretion and the employee, though it may be difficult, needs to be thankful for more than simply the bonus, or lack thereof, whatever the outcomes may be.

      1. Jamie

        You’re correct in that’s how a discretionary bonus works – it’s the same as a thank you gift and there is no negotiating and it’s uncomfortable to ask why someone isn’t giving you their customary gift.

        Although, to wonder where it is is normal and that’s because people see it as part of payroll because it’s not a social gift – it’s based on work performed.

        However, if you’re in a bonus program where it’s spelled out in your offer letter or contract then that’s something wholly different.

        I had that at a former job. The contract was it was X% of my salary as my maximum bonus and the percentage of that I was awarded was based on specific monthly metrics for A, B, and C. This was a contract and a legally binding part of my comp package. If that’s the case for Joe’s company they have a right to know what’s going on.

    2. Ask a Manager Post author

      Joe, why not simply ask, directly and politely? Not with an air of entitlement, but with an honest desire to know why this year was different? Being upset about not receiving something that was not guaranteed and not actually inquiring about it doesn’t make any sense.

  16. dc74

    I have a question:

    I know I’m getting a bonus tomorrow based on overall performance. But my performance review was based on only one manager’s opinion, and it’s basically a pretty terrible review.

    I don’t agree with the review and the bonus is going to be a huge morale suck for me.

    Can I give back the bonus and say something like, “Thank you, but if my performance is not satisfactory I would like to see this money be re-allocated towards my training.”

    Or is that just another can of worms that will lead to another mediocre review? Also, it’s the first time my company is giving bonuses, so I don’t know what that will mean for the future.

    1. KellyK

      Why would you want to give it back? I’d be upset if an incorrect review meant no bonus, but you’re getting a bonus even though your review was worse than you thought it should be.

  17. Lynda Leigh Daughtrey

    I Work For A Business Where I Get A Bonus FOr Collecting
    Money At The Time Of Service. They Hired A New Person To Work On Saturdays And My Office Manager Decided To Give Her25% Of TheBonus. Can ThIs Be Done LegalLy Without Telling OR At Least Consulting With Me?

  18. Kate

    I’m very intrigued by people’s strong sense of privacy around sharing information about their pay and bonuses with others. I willingly share this information with others and ask for it as well! I find having some sense of my “market value”extremely beneficial when I’ve had to determine an hourly rate to charge, negotiate a salary or benefits package, bid on a job, etc. Especially when I’m entering a new field or find that I am unfamiliar with the local job market. I may be too cynical but my belief is that the driving force behind a company’s request /demand that employees keep pay information confidential is simply to maintain the ability to manipulate that cost. Companies would like you to believe that it is an employee relations issue, but as a business consultant, psychologist, and employee relations specialist, I beg to differ. If there was no advantage to the company why keep salaries, bonuses, and incentives a secret? Why not be transparent on the issue of pay and attach bonuses and incentives to clearly defined parameters? I’m a big fan of bosses and companies being open, honest, and as transparent as they can be with their employees. Additionally, when coworkers /colleagues share and support each other everyone benefits, including the company!

  19. Anonymous

    I received my bonus also only to be disppointed to see that it was lower than last year. When questioned my boss she relpied no you got more, I said no I received more last year. she relpied if you did it was a mistake. She made me feel like I didnt deserve my bonus.
    I know my co workers received more than me and I work harder than them, and no the company as done very very well this year. I feel I should report this to HR.

Comments are closed.