Bonus Forum

[admisionquestion]

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 ???

[rayiner]

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]

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.

[rayiner]

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]

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.