Do BONUSES have a positive or negative impact on leadership within organizations?

图像 1I recently published an article on the negative and positive side of bonus payments.   This has been a big topic since the beginning of the financial crisis. Much of the discussion on this subject has been focused on the finance and banking industries. However, bonuses are also increasingly used within higher education.  Indeed, Collini (2012) has even ironised that “vice-chancellors now keep as nervous an eye on league tables as do football managers.” Part of the reason for this is that many have their bonus payments linked the ranking of the university.

Here is a short extract from the article.

Key words: bonuses, executive compensation, higher education, Goodhart’s law, leadership, performance

“According to Heathfield (2014), a bonus is “used by many organizations as a thank you to employees or a team that achieves significant goals. It improves employee morale, motivation, and productivity” (para 3). Using this definition, a bonus should have nothing but a positive impact on a firm. Yet excessive payments in the financial services industry in particular have led to bonuses having a negative connotation. Examples of financial executives paying themselves billions in bonuses during the depths of the financial crisis have been widely condemned by society. This article discusses the use of bonuses in companies from a leadership and ethical viewpoint and also underlines their impact on the organizational efficiency of the firm. It analyzes to what extent bonuses generate positive long-term outcomes in companies.””

“One of the greatest measurement errors involves the calculation of when bonuses should be attributed. At what stage in a change process can it be said with certainty that a bonus is deserved? This is not just linked to financial services. Such problems are increasingly found in fields such as higher education, where bonuses are becoming more widespread. Often these are linked to measurements as ephemeral as rankings. As Collini (2012) ironizes, “vice-chancellors now keep as nervous an eye on league tables as do football managers” ( This is not surprising given that, as Wildavsky (2010) points out, Australian universities are increasingly paying bonuses to vice chancellors based on rankings. This is a dangerous strategy given that ranking systems tend to be highly volatile and focused on the short term. By definition, one of the central roles of a university is knowledge creation, which may take considerably longer that an annual ranking. This may also lead to pushing out research that is incomplete in order to meet short-term cycles or complete neglect of the other central role of a university: knowledge dissemination or teaching.”

For the full article:  click here

Thomas, M. (2014). Bonuses: Leading us to ruin? The impact of financial incentives on leadership within organizations. International Leadership Journal, 6(3), 90–115.

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