Ask LH: Should I Choose A Raise Or A Bonus?

Dear Lifehacker, Today my manager told me that, rather than paying me a bonus each quarter, she would prefer to incorporate that bonus into my base salary. I fear this puts me in a bad position for negotiating a salary increase this year. Am I better off asking to keep the bonus and then negotiating a pay increase or should I accept their offer of incorporating the bonus into my base salary? Thanks, Salary Shopper

Money picture from Shutterstock

Dear SS,

Oh, poor diddums! If only we all had dilemmas like this. Kidding aside, I do see how this could create a conundrum -- on the one hand, incorporating the bonus into your base salary is a great way to ensure you receive it. On the other hand, it creates the illusion of a pay rise that didn't actually happen.

Personally, I'd be inclined to take the salary increase anyway. A bonus is something that can be withdrawn from the table, or the circumstances in which it is offered may change. Conversely, it's much harder to involuntary downgrade an employee's salary regardless of how the business is doing. Even if you failed miserably to meet your targets, the money will still show up in your bank account (until you get fired, that is).

Also, there's no reason to assume that you'll be in a better position to negotiate a pay rise by refusing the change now. If anything, your uncooperative stance might actually hurt your chances -- presumably your manager wants a more predictable budget, so she probably wont appreciate your refusal to play ball. Toeing the company line tends to be a better career move than rallying against it.

During your next performance review, be sure to remind upper management about the bonus situation at the beginning of negotiations. You might still miss out on a pay rise, but at least they can't argue that you already got one.

On a final note, it might be worth siphoning your extra salary into a separate bank account as opposed to treating it like part of your pay cheque; that way you'll still have a chunk of 'bonus' cash available at the end of each quarter.

Cheers Lifehacker

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Comments

    Just miss your targets this year and negotiate the Bonus back next year..

    It's my understanding that it's illegal to decrease employees' pay without their consent - that means if the bonus is incorporated into your salary, you have it until you otherwise choose to relieve yourself of it. That means a bonus every year, locked in. It also means any further percentage increases are on your new higher rate - this may or may not be relevant depending on your employer, but if they do regular fixed percentage increases (like CPI), then you benefit.

    Having the opportunity to negotiate a pay increase does not mean you'll get one. And even if you have your bonus incorporated into your base salary, there's nothing stopping you negotiating a further increase.

    At the end of the day, your employer will either give you more money, or they will not. How they choose to do it is irrelevant to them - it's still the same money.

    I love how it is assumed that you get to re-negotiate your salary at performance review time. A few years ago I had cause to negotiate mine and HR tried to tell me that it was always done at performance review time and when I asked them what the mechanism for enacting that review they had nothing to say.

    I've found the only way I could get a raise that matched my actual rise in skill level and responsibilities was to do it outside of the normal 'process'.

    Personally I'd take the salary increase for the same reasons mentioned above - just be sure that they clearly document that it would not affect any future salary reviews or 'CPI increments'.

    Why not try an open and honest approach, "Can I meet you half way? I would like to negotiate a pay rise in 6 months and was aiming for a 3% increase. Since we're negotiating sooner, can we incorporate a 2% rise?"

    How about this one LH:

    When is best time to ask for a raise? All companies I've worked for have appraisals/performance reviews but none of them factor in any talk of pay whatsoever...it's more to do with your business/development goals (never found any value in them at all and have acquired a vile distaste for the whole process). The whole feedback without reward thing I find quite meaningless.

    My boss(es) who I also do the performance reviews with almost never has a significant input into pay increases and always come from higher ups who you have little interaction with on a day-to-day basis. The whole "pay increase" thing is also quite impersonal, its a letter (or this year an email to cut costs!) handed out to you that's decided upon by the powers that be.

    Is this normal for most people?

    Although saying that, I would have zero chance at getting a pay-rise at my current company....last 2 years without a pay increase company wide (so they say, they gave me a minor 3/4% increase last year) - which is a shame since as I believe I'm significantly underpaid as an electrical engineer.

    I didn't read the article, or your answer. I don't have to. No one should have to, because--

    the GOLDEN RULE regarding any question of, "Should I take the money now, or later?" is always

    TAKE THE MONEY NOW, STUPID!

    Raise your base salary! That way you get more super, more leave loading, and when you quit/are fired your leave hours are worth more.

    Taking a payrise assumes that you will still be around in 12 months to receive the benefit of it. If you take a bonus, that's cash in hand up front. If you take a pay rise and get the sack in 3 months or decide to change employers then you lose out.

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