Question

BONUS COMPENSATION

You have to make bonus recommendations for eight managers that you hired this year. The salary range for the job is ($63,000 - $70,000). They have just completed their first year with the company and are now to be considered for their annual bonus. Indicate the size of the bonus that you will give the managers by writing a dollar amount next to their names. You have a total of $15,771 available (3% of total salary). Please show work.

$__________ A.J. Adams. Adams is not, as far as you can tell, a good performer. You established some fairly easy goals with Adams at the beginning of the year. Few of them have been met. You have checked your view with others, and they do not feel that Adams is effective either. However, you happen to know Adams has one of the toughest work groups to manage. Adams’ subordinates have low skill levels, and the work is dirty and hard. If you lose Adams, you are not sure whom you could find as a replacement. Salary: $69,000

$__________ B.K. Berger. Berger is single and seems to live the life of a carefree swinger. In general, you feel that Berger’s job performance is not up to par, and some of Berger’s "goofs" are well known to the other employees. Once again, the goals that you and Berger set at the first of the year were relatively easy and you are not satisfied with his accomplishment of them. Salary: $65,000
$__________ C.C. Carter. You consider Carter to be one of your best subordinates. Carter established some aggressive goals in January and has met them all. It is quite apparent, however, that other people don’t agree with your positive assessment of him. Carter has married into wealth, and, as far as you know, doesn’t need additional money. Salary: $69,200

$__________ D. Davis. You happen to know from your personal relationship that Davis badly needs more money because of certain personal problems. As far as you are concerned, Davis also happens to be one of the best of your subordinates. Like Carter, Davis has done an excellent job accomplishing beginning-of-the-year goals. For some reason, your other subordinates do not share your enthusiasm. You have heard them make joking remarks about Davis’s performance. Salary: $65,400

$__________ E.J. Ellis. Ellis has been very successful so far as judged by goals accomplished. This particularly impresses you, since it is a hard job. Ellis needs money more than many other people and is respected for good performance. Salary: $67,000

$__________ F.M. Foster. Foster has turned out to be a very pleasant surprise to you, has done an excellent job, has exceeded performance goals, and is seen by peers as one of the best people in your work group. This surprises you because Foster is generally frivolous and doesn’t seem to care very much about money or promotion. Salary: $63,600

$__________ G.K. Gomez. Your opinion is that Gomez just isn’t cutting the mustard. The few goals that were set at the beginning of the year are not being aggressively pursued. Surprisingly enough, however, when you check with others to see how they feel about Gomez, you discover that Gomez is very highly regarded. You also know that Gomez badly needs a bonus. Gomez was just recently divorced and is finding it extremely difficult to support a house and a young family of four as a single parent. Salary: $63,000

$__________ H.A. Hunt. You know Hunt personally. This employee seems to squander money continually. Hunt has a fairly easy job assignment, and your own view is that Hunt doesn’t do it particularly well. Performance goals are sporadically met. You are, therefore, quite surprised to find that several of the other new managers think that Hunt is the best of the new group. Salary: $63,500

Answer 1

Managers	Current Salary	Performance	How much of the $15,771	Rationale
A J Adams	$69,000.00	Met some expectations	0.00	Adams was set easy goals and yet has not met all of them. He is also not considered effective by others. His salary is quite high but his performance does not match it and so does not credit a bonus this year.
B K Berger	$65,000.00	Does not meet expectations	0.00	Berger has not met his relatively easy goals satisfactorily this year and does not merit a bonus. Additionally, his performance is considered sub-par by you and other employees.
C C Carter	$69,200.00	Exceeds expectations	4400.00	Carter is considered by you to be one of the best subordinates even if others don't agree - this could be based on other reasons however so need not factor in too much in the decision however some pro-bias towards him might exist on your part so should be balanced with others' opinions. Though he does not need the money he is due a bonus as good performance, such as setting and meeting aggressive goals, should always be rewarded as it encourages the same behaviour in the future.
D Davis	$65,400.00	Met expectations	2200.00	Davis has met all his beginning of the year goals and deserves a bonus for his excellent performance. Other subordinates might not share the same enthusiasm however this could be out of professional jealousy as Davis was able to meet all his goals.
E J Ellis	$67,000.00	Met expectations	2200.00	Ellis deserves a raise as his job is a particularly hard one and yet he has been very successful in meeting his goals. He is also well respected by others
F M Foster	$63,600.00	Exceeds expectations	4400.00	Foster deserves a good bonus for exceeding expectations of his role.
G K Gomez	$63,000.00	Does not meet expectations	1071.00	Gomez is not pursuing his goals at the extent needed, possibly personal issues are taking away from professional time. He is however well-regarded among his peers suggesting that he must bring something else to the table that you are not aware of. His salary is the lowest of all however so to compensate a smaller bonus can be given.
H A Hunt	$63,500.00	Met some expectations	1500.00	Hunt only meets expectations sporadically. Rewarding such behaviour especially when the employee is a personal connection can look like favouritism. However, personal bias can go both ways so it should be balanced with public opinion, in this case others think Hunt is one of their best so there might be areas that he's performing well in that are not captured in his goals or obvious to you, so he can be awarded a smaller bonus.