September 24, 2010 / 8:26 AM / 9 years ago

Management Tip of the Day: Try a new approach to bonuses

A visitor looks at "Formula" speed boats at the 2007 New York National Boat Show in New York, January 4, 2007. Boat dealers are upbeat about 2007 sales after a record year for Wall Street bonuses. REUTERS/Mike Segar

BOSTON (Reuters) - The Management Tip of the Day offers quick, practical management tips and ideas from Harvard Business Review and ( Any opinions expressed are not endorsed by Reuters.

“It’s an issue in constant debate, but it is clear that conditional compensation, such as bonuses, can encourage employees to perform better. However, annual bonuses may not give employees the motivating effect you want. For example, they often focus on year-end results and not enough on the values and behaviors you want employees to display all year long. Instead of giving employees a large bonus in December, consider giving smaller payouts throughout the year, tied specifically to outcomes you value when they happen. Giving supervisors authority to decide on bonuses can be successful as well. Recognition that comes from a direct boss has shown to be far more motivating than a check from a finance department. The bonus becomes a relationship-builder rather than a transaction.”

- Today’s Management Tip was adapted from “You’re Getting a Bonus! So Why Aren’t You Motivated?” by Eric Mosley.

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