Raise vs Bonus

[DistCoop]

Hello all,

I work for a consulting firm in the utilities sector. I recently got my PE, and am hoping for a bonus. The thought occurred to me though, it so happens I intend to purchase my first home next year, and some extra cash on hand would be useful. I considered asking for a bonus instead of a raise. I know that's not a great idea normally, but this license and (hopefully) a reward from my employer happens to coincide with an immediate use for money.

So, first off, is that a reasonable request? If so, how much is appropriate? It seems to me that a one time bonus should be more than a raise. Suppose I were expecting a 5% bonus for my PE... would asking instead for a 10% one time bonus be a fair trade? Another number?

I'm curious to hear your thoughts. Thank you for your time.

 

[DistCoop]

One correction:

Suppose I were expecting a 5% raise for my PE... would asking for a 10% bonus be appropriate?

 

[oldestguy]

The PE may or may not have any special effect, since that may be a requirement of the job anyhow. In some situations not getting the PE may negative3ly affect the future promotions.

 

[JohnRBaker]

Personally, I always preferred a raise over a bonus. A raise permanently increases your base pay while a bonus will only have a one-time impact. I know it's not the same as it was in the old days, but back when I entered the professional work force your future pension was often tied to your base pay. Also, if you did get laid-off, your severance and any unpaid vacation was based on your base-pay. Also, if merit raises were computed as a percentage of your base pay then those raises would continue to 'pay-off' in the future. Now don't get me wrong, there were times when they offered a bonus NOT as part of our normal compensation package but tied to some one-time event or accomplishment, then if was seen as a sort of 'profit-sharing', which is a totally different situation, at least in my opinion and based on my own personal experiences.

Now there are situations, such as sales-personnel where their comp-plans are a 'base pay' plus compensation based on the value of closed business with a 'bonus' for going over a certain multiple of your quota or some other final incentive for superior sales performance. That's different and while I worked in a sales environment for seven years, I was being paid as a professional and therefore only got an occasional minor 'bonus' linked to some stated goal or accomplishment, but not as part of an agreed-to compensation plan. And then at certain levels of management, there are bonuses paid on the performance and accomplishments of your organization, something that I only 'enjoyed' for a couple of my 49 year career. For example, our oldest son holds what's equivalent to a senior director/vice-president position for a large multi-brand national restaurant company where he's responsible for one of the brands (65+ stores with something like 4,500 people and this is just the food preparation side of the business and not the front service or bar segments). Now his comp-plan is heavily weighted toward performance-based bonuses, paid quarterly in addition to his base pay, but that's very different than what you're talking about or what regular professionals would encounter in the engineering workplace, at least based on what I've seen.

John R. Baker, P.E. (ret)
EX-Product 'Evangelist'
Irvine, CA
Siemens PLM:
UG/NX Museum:

The secret of life is not finding someone to live with
It's finding someone you can't live without

 

[GregLocock]

Tell you what, I'll give you 100% of your salary as a one off payment in exchange for 50% of your future earnings. Doesn't sound very sensible does it? Organisationally it would cause an issue since your future salary should be based on your usefulness at the time and would not take a bonus into account.

Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376

http://eng-tips.com/market.cfm?

 

[TheTick]

Bringing your personal problems into salary discussion is unprofessional.

 

[HamburgerHelper]

Raises compound raises. A bonus is just a bonus.

 

[Sparweb]

Have you accidentally hinted that you might leave the company or be looking for a better job elsewhere?
If there's any odour of that in your recent behaviour, then here's what your boss could be thinking:

"This guy's trying to get an extra few grand out of us before he quits next month."

You may not think that way, and maybe you have no intention of leaving, but maybe your boss had an employee do that already - maybe your boss is the type that would do that himself!
Sometimes, ideas may seem mutually beneficial in the mind of the team player, but appear to give too much advantage to the other guy, in the mind of the adversarial thinker.


STF

 

[truckandbus]

Depending on where you live, the 10% bonus will wind up as 5% after taxes (higher taxes on bonuses than straight pay)

Stick with the raise

 

[MacGyverS2000]

I get the impression you guys are missing the OP's point. It's not that he doesn't understand what a raise versus bonus means in the long run... he wants cold hard cash NOW so he can make a downpayment. Seems a reasonable trade-off if the market is low, if you're spending a lot of money on rent right now, etc. Even a 10% raise can't beat a 10% bonus if he needs cash in hand.

Dan - Owner

http://www.Hi-TecDesigns.com

 

[SLTA]

If I were going to ask for that, then I would explain to my boss exactly why I was asking for it.

Please remember: we're not all guys!

 

[SLTA]

stupid track pad. hit post too soon.

I don't see any harm in asking, as long as you explain the reasoning. I personally would be happy to help someone out, assuming it was an even trade (or better deal) for the company.

Good luck with your house search!

Please remember: we're not all guys!

 

[Triangled]

like SLTA, I'd talk about it with da boss. If it's a small firm like mine, the interpersonal relationships and personal story are a big deal. If it's a giant firm, I'd go for the raise for the reasons above.

 

[EdStainless]

Another story, my daughter went back to grad school. Her company didn't have a formal tuition reimbursement plan so she asked for help with the $60k bill. Instead they gave her a $10k a year raise.
She was disappointed, I was elated. I explained to her that they just gave her $500k over her carrier. Take out a low interest loan and relax as you pay it off.
It is all a matter of where your situation is and where you (think) you are headed.

= = = = = = = = = = = = = = = = = = = =
P.E. Metallurgy, Plymouth Tube

 

[DistCoop]

Thanks for the thoughts everyone... all good points. MacGyver is correct, I understand it's not often a great decision, but think it could be now.

I'll think some more

 

[Mr168]

Keep in mind, whatever lending agency you use in your home buying may only use your base salary in determining your interest rate - in my experience, they would not let me "take credit" so to speak for bonuses, per diems, and living allowances, even though they comprised over 20% of my income at the time.

 

[Terratek]

A 5 percent raise is definitely better than a 10 percent bonus and no raise. That's easy math. Now, if you were talking about a 3 percent raise vs a 15 percent bonus, that may be worth some analysis.

But if you aren't getting 5 percent annual bumps in your in your first 4 to 5 years out of school anyways, I would be looking hard at why not - unless you started at above average salary.

I think my annual raise and bonus were each about 15 percent during the year I got my PE. None of it was itemized as a specific reward for getting my PE, but I have no doubt it helped.

 

[FeX32]

I'm surprised at the large negatives towards a bonus.
I understand the math works out better in the long run. But, that assumes you won't get a bonus or a raise the next year that might be larger because your base pay is lower than what it might have been.
We usually give both raises and bonuses based on performance. More so on the bonus side if the employee deserves it.
There is a limit to the salary usually, no limit to the bonus...