The Three-Ring Binder

Earlier in my career, I worked at a place where I made what seemed to me at the time pretty decent money, let's say $50,000 a year for round numbers. It was decades ago and the precise number doesn't matter a whole lot. Dollars bought a different amount back then, too. But it was in that range and it will help to have a frame of reference to understand the proportionality of things.

While at this company, I once did a really impressive task—something that took about 3 months but could just as well have taken someone a year. At an annual company party, they gave out “Technical Achievement Awards.” I got one, and a bonus. $600, if I recall, which I used to buy airfare to LA for a technical conference I'd wanted to attend—my idea of a fun vacation. I think it's good when companies do things like that because it ties reward to specific achievement and motivates people to do good works.

Sometimes, however, the company would just send me unexpected extra money. Bonus money. Just because. Okay, not just because. There was an explanation. In fact, there was with the money a three-ring binder containing a stack of pages personalized to me, telling me why I got the bonus. It explained the company's monetary goals and told me I was part of it all. It had special pages that showed my personal salary and some way of computing how much of the share of things I was due because if the company was succeeding, it must be partly because of me.

The strange thing was, though, the big binder never said what my job was or why anything specific I did deserved a bonus. It said it was due to me because of my title and salary. (It occurred to me that people with better titles and better salaries got higher bonuses and perhaps even thicker binders explaining why. My recollection, which could be faulty, were that salaries at the company went up to $150,000 or more for corporate officers and well over $100,000 for some founding technical people. Not counting stock, of course.)

Note that this wasn't an incentive bonus. I got the money after the company did well, and with no prior notice (other than a previous bonus). It was really just a gift. The company had made extra money and they were sharing it in proportion to what they paid me.

Tipping Point

I knew my fellow employees were making less. I had a friend who was a receptionist and another who was a clerk, both making less than $20,000 per year. The free market is harsh about salaries; skills that can be easily replaced are not highly paid. But these people were very pleasant, conscientious, and hard-working, the kind of people you'd want to be working with.

At some point I found out somehow that they were not getting raises they were due. I was told the raises would come soon, but it seemed obvious that our bonuses were more important. This was especially sad because the guy who was the clerk had gone out and learned to program databases and was doing good technical work that was no longer clerical. He was due a whole new job title. Overdue, actually. I don't know if he would have qualified for a three-ring binder once was reclassified, but he definitely didn't as a clerk.

Having received a couple of these bonuses, and feeling just a bit embarrassed about it given the situation these others were in, I said to my boss, “I'm not accepting any more of these surprise bonuses until I hear those people have gotten the raises and promotions they're due.” I knew they needed the extra money more than I did, and they were working very hard.

I also added another condition: “No more bonuses for me unless they could say specifically what I had done personally to earn mine. Telling me my salary didn't count. I wanted them to list an actual deed.” I really wanted the company to have to know what I had done personally. I wanted them to value me as a person, not value the fact that they employed high-cost folks. Most high-paid people I knew were in fact contributing a ton of stuff, but a few were not. And some lower-paid people were contributing, too. I thought it was better if they offered bonuses based on what they wanted to incentivize, accomplishment, and not on the basis of superficialities.

Unfortunately, I'm not actually sure if my if that did any good for several reasons, one is that I didn't have access to their pay, another is that the company ended up not continuing to make money and the bonuses stopped of their own accord. And the third is that I transferred to another group for other reasons. But at least I tried.

Reflecting on Those Times

I hope this doesn't sound too much like I'm tooting my own horn. I'm not trying to hold myself up as a paragon of virtue here. What I'm trying to say is almost the reverse, actually. It was easy for me to turn down the bonus at that time. I was young, single, healthy, and well-paid. Perhaps I could have and should have banked more money then than I did, but I didn't. That's a different issue. My point is that for me it was treated as surplus to be spent in one way or another, whether on myself, my friends, or charities. It was not money I needed to get by.

It may sound like a big gesture but, while I do remember my specific salaries from back then, I don't remember the amount of the bonuses. They were just free cash, cash I'd never planned on, cash I could do without. I think it might have been a thousand or two but I just don't recall. The main reason why I think that is that I vaguely recall thinking that to someone making $20K it would be a 10% raise. But to me it was less. The difference between $50K and $52K is much less noticeable compared to the difference I imagined it would make to people making say $18K to get to $20K instead. So it may sound like an offer on my part to endure a big sacrifice, but it was just not. And not only was it proportionally less for me, but it was money I didn't need to survive, while it might have been money my colleagues did need to break even. So I repeat: I wasn't offering a big sacrifice.

Actually, as an aside, it is a kind of sacrifice but in a way you might not expect. Companies really like team players, and telling them you don't like their bonus structure is not playing the team way. So if you're rushing out to do this, beware that people may worry you'll succeed in stopping the bonuses and then they'll be affected, too. So it puts you at personal risk not from loss of the money but loss of your possible climb up the career ladder, if you are hoping for that kind of thing. As I said, I was still young in my career and I had a lot to learn about teamwork and organizational politics. Nothing is ever what it seems at first. So be careful. I'm not advocating everyone rush out and do what I did, though I am noting it as an option. I'm really just trying to build up to one final point, which is this:

When I see people of great wealth, especially wealth running into the millions, the kind of wealth that leaves one without fear of being out on the street or having nothing to eat, talking about the pain of taxes or a dip (or even a plunge) in the market, I cry crocodile tears. Economic incentives can be a useful tool for focusing society, but they can also end up blurring some truths we need to keep clear in our heads.

It matters a lot that we have a viable community in which people are employed and not out begging in the streets or rioting. In these hard economic times, rather than worrying about money lost, those still wealthy among us should be worrying about how to use that wealth wisely to help maintain a viable society. I'm not saying they have to rush to give it away in a fit of guilt. But they can think of creative ways to nudge the system to be more fair to all people who want to work to do a decent job for decent pay.

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