You first need to make sure you understand how your bonus was determined. Often, individual bonuses are based on a combination of the company's performance and the individual's performance.
What Goes Into a Bonus
The company performance part of the calculation "isn't usually all or nothing," says Laurie Bienstock, practice leader for strategic rewards at Watson Wyatt Worldwide, a human resources consulting firm. Generally, the company has to meet a certain financial threshold before it will pay any bonuses at all. After that, it scales up to 100 percent of the planned bonus money -- or even more, if the company does exceptionally well.
At many companies, individual performance also comes into play at bonus time. Sometimes individuals' bonuses are tied to the overall rating they receive in their performance evaluation; other times, they're based on whether the worker accomplished a specific list of goals.
Keep Your Boss in the Loop
When it comes to bonuses, communication with your boss becomes critical.
"If the bonus is directly tied to your performance rating, make sure you understand what you need to do to either meet or exceed expectations," Bienstock says.
If the bonus is based on a list of goals, then you need to be certain you understand from your boss what those goals are -- and how success will be measured.
"When you have that conversation with your boss and you walk away and you think this is what you're supposed to do, write it down and send it to your boss and say, 'This is what I heard, is this correct?'" says Jan Schmuckler, an organizational psychologist.
Measures Throughout the Year
It's equally important to keep talking with your boss during the year about how you're progressing so there are no surprises when you open your bonus check.
One of the most confusing parts of performance-based bonuses is what happens when you can't meet one of your goals due to circumstances beyond your control. Perhaps a project is canceled or delayed; maybe you move to a new job with new responsibilities. It's very important to talk to your boss when this happens. Can you replace some of your old goals with new ones? Don't make assumptions about how your boss will handle it -- and don't wait until the end of the year.
Not a Solo Performance
You may find it frustrating to have part of your pay tied to your performance evaluation or to how well the company does. But this is the way of the future. A recent survey of employers by Watson Wyatt found that 22 percent of U.S. companies had increased the amount employees could receive in bonuses, and 10 percent had made performance-based pay available to more workers.
"Companies are also raising the bar on how hard it is to achieve those," Bienstock says. Almost half increased the company's financial goals that are tied to paying bonuses, and more than one-third increased individual performance expectations.
