Bonus

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admisionquestion
Posts: 473
Joined: Sun Sep 26, 2010 12:16 am

Bonus

Postby admisionquestion » Fri Jul 29, 2011 1:13 pm

Hi,

I am naive about bonuses. Will someone explain them too me--I have three main questions.

1. Why do businesses in general give out bonuses rather than just providing a baseline salary that is higher. What is the psychology or accounting advantage of bonuses over higher wages.

2. Are signing bonuses common at biglaw firms, what sort of stipulations usually accompany them.

3. What is a typical yearly bonus for a biglaw first year associate. 160,000 salary and ???

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rayiner
Posts: 6184
Joined: Thu Dec 11, 2008 11:43 am

Re: Bonus

Postby rayiner » Fri Jul 29, 2011 1:18 pm

admisionquestion wrote:Hi,

I am naive about bonuses. Will someone explain them too me--I have three main questions.

1. Why do businesses in general give out bonuses rather than just providing a baseline salary that is higher. What is the psychology or accounting advantage of bonuses over higher wages.

2. Are signing bonuses common at biglaw firms, what sort of stipulations usually accompany them.

3. What is a typical yearly bonus for a biglaw first year associate. 160,000 salary and ???


1) They give firms more flexibility. In good years they up the bonus to keep people from leaving, and in lean years they can cut the bonus to trim expenses.

2) No.

3) Bonuses have ranged, recently, from $7,500 in 2009 to $45,000 in 2007 for first-years.

WestOfTheRest
Posts: 1412
Joined: Mon Jul 07, 2008 11:10 pm

Re: Bonus

Postby WestOfTheRest » Fri Jul 29, 2011 6:40 pm

rayiner wrote:
admisionquestion wrote:Hi,

I am naive about bonuses. Will someone explain them too me--I have three main questions.

1. Why do businesses in general give out bonuses rather than just providing a baseline salary that is higher. What is the psychology or accounting advantage of bonuses over higher wages.

2. Are signing bonuses common at biglaw firms, what sort of stipulations usually accompany them.

3. What is a typical yearly bonus for a biglaw first year associate. 160,000 salary and ???


1) They give firms more flexibility. In good years they up the bonus to keep people from leaving, and in lean years they can cut the bonus to trim expenses.

2) No.

3) Bonuses have ranged, recently, from $7,500 in 2009 to $45,000 in 2007 for first-years.

Not only do they give firms more flexibility, but they're also considered to be a better motivator. Bonuses are linked to firm performance and firm performance is linked to the performance of each individual in the firm (to some extent). So the theory is that people will work harder/better if their compensation is linked to their performance.

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rayiner
Posts: 6184
Joined: Thu Dec 11, 2008 11:43 am

Re: Bonus

Postby rayiner » Fri Jul 29, 2011 7:43 pm

CastleRock wrote:Not only do they give firms more flexibility, but they're also considered to be a better motivator. Bonuses are linked to firm performance and firm performance is linked to the performance of each individual in the firm (to some extent). So the theory is that people will work harder/better if their compensation is linked to their performance.


At least in NYC, bonus is not linked to firm performance. They're linked to Cravath/SullCrom's performance.

Renzo
Posts: 4265
Joined: Tue Dec 02, 2008 3:23 am

Re: Bonus

Postby Renzo » Fri Jul 29, 2011 7:49 pm

rayiner wrote:
CastleRock wrote:Not only do they give firms more flexibility, but they're also considered to be a better motivator. Bonuses are linked to firm performance and firm performance is linked to the performance of each individual in the firm (to some extent). So the theory is that people will work harder/better if their compensation is linked to their performance.


At least in NYC, bonus is not linked to firm performance. They're linked to Cravath/SullCrom's performance.



There is some link to performance, insofar as you need to make your hours. Although the sentiment is the same when the choice is make your hours and get a bonus, or don't and get fired.




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