Bonuses Bonuses are becoming an increasingly popular form of individual incentive
in Canada.^76 They are used by such companies as Molson Coors Brewing Company,
Ontario Hydro Energy, and the Bank of Montreal. Bonuses are more common in the
United States than in Canada, with more employees receiving them and larger rewards
given.^77 This is because Canada has a more unionized economy, a relative lack of com-
petition, and a large public sector. Until recently, the only bonus for federal civil servants
was $800, awarded to those in bilingual jobs. More recently, both federal and provin-
cial governments introduced bonuses for public sector employees to acknowledge sup-
erior performance.
Bonuses can be used for reasons other than improving performance. A recent study
showed that 39 percent of small and medium-sized companies used bonuses as a reten-
tion strategy, so that employees would not look for jobs elsewhere.^78 In spring 2006, in the
hopes of having no labour unrest during the 2010 Olympics, the BC provincial government
offered bonuses of about $3000 to every public sector employee whose union signed a four-
year (or longer) collective agreement. As a result of the bonus offer, all affected unions set-
tled their contracts before the March 31 deadline set by the provincial government.
Bonuses are not free from organizational politics (which we discuss in Chapter 7), and
they can sometimes result in negative behaviour. When using bonuses, managers should
be mindful of potential unexpected behaviours that may arise when employees try to
ensure that they will receive bonuses.
Group-Based Incentives
Gainsharing The variable-pay program that has received the most attention in recent
years is undoubtedly gainsharing.^79 This is a formula-based group incentive plan.
Improvements in group productivity—from one period to another—determine the total
amount of money that is to be allocated. The productivity savings can be divided
between the company and employees in any number of ways, but 50-50 is fairly typical.
Gainsharing differs from profit-sharing, discussed on the next page. Gainsharing
focuses on productivity gains rather than profits, and so it rewards specific behaviours
Chapter 4Motivating Self and Others 127Even though the cost of the gun
registry grew from $2 million to
over $1 billion and an internal
Justice Department investigation
reported problems with the
usability of the data, 96 percent
of civil servants at the Department
of Justice received bonuses for
their performance in 2002. This
calls into question whether the
federal government actually uses
a pay-for-performance system
when giving out rewards to
employees.gainsharing A group-based incen-
tive plan in which improvements in
group productivity determine the
total amount of money to be shared.