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 | From the Editor's Desk
Dont Give Cash Performance Bonuses in a Loss-Making Company Bonuses, particularly performance bonuses, negotiated up-front, are standard and reasonable fare in established businesses. Some smart people think they’re a good idea in start-ups, too. The basic argument is the same for start-ups as it is for other companies: incentives focus and motivate managers and individual contributors alike; tying compensation to goals stimulates performance. It’s not a crazy notion in the abstract, even though some research shows that cash rewards can actually diminish performance in cognitive tasks. I’m all for profit-sharing, but only when there’s a handsome-enough profit to share. Until your company is generating a bonanza, you shouldn’t consider doing anything other than reinvesting the cream in your growth. And I think cash bonuses are a particularly bad idea when your start-up is losing money.
Continued here
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