Employers more frequently tie incentive pay to individual staff achievements, resulting in detrimental consequences for overall work environment and team dynamics.
Performance-Related Bonuses Shift Focus in German Companies
German firms are moving away from company-wide success as the sole factor for performance bonuses, favoring individual and team achievements instead.
In a study by the Institute for Employment Research (IAB) in Nuremberg, it's clear that companies are increasingly tying bonus payments to individual employees' performance. This shift, according to the IAB, is a positive move, as employees with team-oriented bonuses report less sick days and higher job satisfaction.
But let's dig a little deeper into the insights surrounding this trend.
The Power of Teams
Employees with team-centric bonuses are typically healthier and happier at work. Team performance bonuses can significantly decrease the number of sick days taken, as much as two days on average, and boost job satisfaction, provided that collective performance is the core focus.
Individual vs. Collective Success
While the share of individual performance in bonus payments has remained relatively constant at 49 percent for non-management employees, it's a different story among managers. Individual performance takes center stage for managers, with a recent increase to 31 percent, while company success remains the dominant criterion at 50 percent.
The Impact of Large Companies and COVID-19
The surge in performance-related bonus payments is particularly pronounced in large companies, with usage increasing from 59 percent in 2019 to 77 percent in 2023, a rise of over 30 percent. This trend can be attributed to the COVID-19 pandemic, as companies adapt to more flexible and remote working arrangements.
dpa/
md
- Team-centric bonuses, which are more prevalent in finance departments of large companies, have shown a significant decrease in the number of sick days taken, averaging two days less, suggesting a positive impact on the health and well-being of employees.
- In the realm of business, individual performance is increasingly being recognized as a key factor in bonus payments for managers, with a notable increase to 31 percent in recent years, while the importance of company success remains high at 50 percent.
