South-Western - Management  
Bonuses Shouldn’t Be for Jobs Poorly Done
Topic Human Resources Management
Key Words Bonuses, pay-for-performance
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News Story

In July of 2005, the Department of Veterans Affairs announced a more than $1 billion shortfall. A backlog of cases has piled up, and the average delay in getting benefits to injured veterans is 177 days. Yet, most of the civil servants who work in the office receive bonuses, some as much as twice the amount of their annual salary.

The bonuses are typically paid in September, but Rep. John Hall said he will introduce legislation to freeze all 2007 fiscal year bonuses until the VA has reduced its backlog of cases to fewer than 100,000 claims, down from the current 600,000.

The largest bonuses of $33,000 are reportedly 20% of the receiver’s salary. That equates to a basic salary of $165,000 a year. According to the White House Office of Personnel Management, roughly three-fourths of every senior official at the VA has received some kind of bonus every year. The VA’s bonuses have increased from being the lowest in government to being the most generous. Across all government agencies, about two-thirds of all employees receive bonuses, which averaged $13,814 in 2005.

VA agency spokesman Matt Burns says that rewarding knowledgeable and professional career public servants is appropriate and that the importance of retaining these employees can not be overstated.

It is the author’s opinion that it is better to reward performance and competence.


Do you agree with Matt Burns when he says that the VA workers are knowledgeable, professional career civil servants, for whom a bonus is an important tool to help with retention?


What type of bonus structure does the civil government appear to be using? What are the pros and cons of this type of bonus structure?


What compensation structure changes might you recommend to the VA office to get their system back on track?


Name at least three reasons why companies would want to expand upon and improve rather than completely abolish their recognition and incentive programs.

Source “Bonuses Shouldn’t Be for Jobs Poorly Done,” Tri-City Herald, May 14, 2007, pNA.
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