Do You Deserve a Raise or Bonus?
It’s that time of year when discussions about bonuses and/or raises start happening. I always dreaded those self-assessments the boss would place in front of me. Usually there would be a scale from 1 to 5 with one being the lowest on up to 5. It was always a struggle about giving myself too high a score for fear of sounding arrogant. If they asked me for a written explanation of why I put the score, I would use the opportunity of justifying my scoring.
Self-assessments are wonderful tools, not just for a raise, but also for evaluating how you are doing with meeting work goals plus looking at ways to enhance or add to the work environment. Once reviewed, I always found ways to improve or add to my position.
Most of the time, my scoring was lower than my supervisor’s evaluations. There was one boss, who was my favorite boss ever, who would not score anybody a 5. He just had an issue that any employee was that perfect. I am sure I gave myself some 5s, and I was nervous, yet confident because I had put my all into the work. Nervously, I sat in the chair in my boss’s office and went over his final evaluation of me. He gave me 4+ on all the evaluated points. The best, and likely most important, part of it all was that he gave me a substantial raise. Supposedly, it was much higher than others would have gotten. He also apologized that there was not a budget for more than he felt I deserved more. This was my first boss after college, and I gained a wealth of experience at that agency.
When I worked at a factory, we had simple evaluations, but like the one mentioned. Mine always said I was very efficient, detail oriented, and needed to work a little faster. It could have thrown me to get that last part, but I prided myself in the other points and put more effort in the speed. This worked, mostly, but I never was one to make what they called “piece work” for moving fast enough to make more money. Other workers liked that I was not as fast because that kept the expectations a little lower for the average, making it easier in the long run. So, I guess you could say I was doing somebody some good. What I also learned about factory work is that I made a better inspector than piece worker.
There are some crucial points to ponder with bonuses and/or raises.
Let’s look at some questions to ask yourself:
· Am I adding value or color to the business?
Many people consider themselves successful to add to the black vs red of business, keeping the company from financial duress. How about adding to the green? Adding to the green means contributing not only to keeping the balance of the company in the black but also growing that balance to create growth. Saving money for the company will benefit you as the employee and could even show up in your bonus.
Creatively thinking, there are ways to make the green happen. One way might be to look at how much waste may be occurring. Is there a way they can reduce or eliminate this? Are there opportunities for recycling? Are there work duties being unnecessarily duplicated? Is software the most efficient or is it time to evaluate making changes? Are workers ergonomically healthy? Are there ways to eliminate discomforts from poor ergonomics? Are there any concerning trends in work-related injuries?
Word of warning: if you are the one to make change happen, prepare to be unpopular. Not all workers will want to change. I have seen workers who despite ergonomic recommendations and even physical therapy will still manipulate their workspace for their own usual comforts. Some companies form ergonomic teams and the human resources department would be the ones to address any manipulations, making the work environment better over-all.
Is all talent being used in the company? Some companies may contract services outside when there are employees who have the skill set to complete these tasks. Given the time the employee must contribute, is always a factor. If there is enough time, this could be a huge money saver.
· Did I meet or exceed goals from the past year, set by myself and management?
Reviewing past goals and being prepared to answer to the successes and challenges, better prepares you for discussion with superiors. Answering this question helps with setting goals for the upcoming year.
Not all goals may have been reasonable for completion in the year. Recognizing this and looking at the best ways to make this work in the next period or even adjusting time frame expectations shows initiative for taking responsible action as a change maker. This turns the power of loss into a power of gain. It’s a win-win for the employee and employer. If you did not work as much as you needed on the goals, this can be a tool for growth and possibly will result in a salary increase in the next period.
· Did I add innovative or new ideas and solutions for the company and clients or customers of the company?
New ideas bring fire to the business, igniting the interest of potential clients. This is where you see creativity come alive. Like adding color or value to the company, new ideas could be something as simple as finding a better way to do something which is eating up time to creating a whole new product line.
When meeting with a client, we were reviewing where they were in their marketing process. It occurred to me that there was a whole area which could be tapped into. With this discussion, we explored more marketable ways to make this project spark. This focus could make a difference in their bottom line and increase interest in ways that were not opened before. This client would be in the green sooner, possibly, and I would also benefit. Another case of win-win brought about by creative thinking.
· Did I set the pace for a positive workforce and notice, as well as note, positive changes with others?
Be the leader and show the results of those you lead. Chances are, you did not find success on your own. It likely took teamwork or some dependence on others. Keeping a positive vibe in the workplace, recognizing people for their contributions, only serves to keep the pace on the upside. On the flip-side, discounting others to where they feel they are not recognized or appreciated could result in negative workspace.
In one of my roles of overseeing others, there were some workers who worked well, staying focused. Their work rarely needed addressed. As a result, with evaluations, this showed up. They set a positive pace in the workplace. This did not always make them popular, and I had to be discreet with my praise. Otherwise, it would have created a rumble in the environment. The persons who would have taken issue should have done a better job of focusing, but the arena is not the place to bring this up. With one person, who was such a hard and efficient worker, I could help them when they felt the need to try some new things in the same company. This kind of recommendation would not have come if they were not doing their job.
Let’s say that you got that bonus. There are some tax points to consider. Let’s look at those:
· The company, under Federal and State regulations, must or should follow the supplemental pay withholding tables.*
While the withholding rates may be a higher percentage than your actual tax brackets, you may receive a refund when you file your Federal and State income tax returns. This depends on your individual tax circumstances.
· Expectations for what tax year you will receive your bonus need to be clear.
You may want to talk to your employer about when you will get your bonus. They will include your bonus in your W-2 in the year you receive the bonus. Therefore, it is not to be included for the date they informed you of your bonus, but the constructive received date. For example, a bonus constructively received in December will be included in the current year. A bonus constructively received in January will be included in the following year. Depending on individual circumstances, you may be in a lower or higher tax bracket in one year, compared to the other year. This, given an opportunity you may want to receive your bonus in the year of which you would be in the lower tax bracket. Deferring a bonus by a few days, to fall into the next calendar year, may save you tax dollars in the long run.
To follow up on the above tax points research IRS.gov or speak to your tax adviser, i.e. an enrolled agent of CPA. They may be able to prepare an income tax analysis specific to your tax situation.
*This is in relationship to US taxpayers’ situations; Other countries would need to consult with their tax laws.