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Topics: Career Development, Organizational Culture, Risk Management
How can bonus be organise for project success?
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I have encountered like some of you I suspect People that would have bonus base on the expected profit of a project.

I see that has counterproductive since on long project (many years) the bonus are paid a few time (yearly).

For many, this could prevent identifying some risk and putting a potential cost that is realistic. This process increases potential risk, so increase bonus.

Have your organization found a better way to give a bonus? What was put in place to ensure effective risk identification?
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May 29, 2019 10:14 AM
Replying to Sergio Luis Conte
...
Sorry but if you accept that you are lost. That is one of the big mistakes people done when accept and assignement as project manager. Benefit/revenue/profit is not because the project. It is because the solution the project is creating. Business Analyst is in charge of the solution. Project contributes to benefit creation in indirect way. For example, if a project manager accept a project objective or goal (the meassure of project success) like this "growth in market share 5% in the next year" is the first step to accept the project will fail. As project manager the only thing you can "assure" is the project will contribute to that because the project will create the product/service/result as defined (scope/quality) in the time frame needed (time, perhpas less one year in this case) and with the expected cost (cost is a component inside value definition which is a component inside benefits definition).
I understand what is the benefit of the project. And I agree that it would be for the owner after project delivery. For the executing company, the revenues and profit are within the project execution (till completed).

All depend on the side your in. Private company executing project for other need to make the revenue in the project. The client/owner should expect the benefits in the following years (increase in sales, or reduction in cost....)

In both case, how can you organize a bonus to the PM so to maximize project success?
...
1 reply by Sergio Luis Conte
May 31, 2019 5:33 AM
Sergio Luis Conte
...
Vincent, my intenttion was not said you do not understand that. Sorry if my previous comment was not write in the right way. Just to comment, Always a project is executed for getting more money. Becasue most of the times I worked leading initiatives that was technological or business model not proved at the time somebody hired me (in the last time Agile for example) I worked where a hugh component of my final earning was tied to initiative benefits. But in this case I took control of the defintiion of the solution too. Not about the activities needed to define the solution (activities to do that are in charge of PM), about the solution requirements for example and strategy analysis (so, more closely to BRM or business analyst). My point is you can not accept something that is out of your control as project manager if you do not take part of the role duties related to the role that are in control of it (for example BRM or business analyst). That is my point. Just to comment, that is a debate I performed when I was part of the group of authors/reviewers of the new PMBOK when table 1-2 was created. How to organize the bonus? Putting bonus objetives stated in SMART way for the project manager related to those things she/he is able to be accountable for: creating the product/service/result as defined (scope and quality), in the time frame needed because the opportunity window (time) and inside the estimated cost because cost is a component of benefit/revenue/profit calculation (cost). Beyond that if the project has other constraints like take care of the environment (for example close to GPM way of management projects) then those must be included.
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May 29, 2019 4:47 PM
Replying to Stéphane Parent
...
In my case, it was a three-year project and it the bonuses would have gotten in the way of the profit margin, they would have been the first to go.
Would the PM have quit if they had cut a bonus?
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Hi Vincent, in my limited experience, we being a service provider, project bonus were given only to certain type of projects, such as mission critical projects, or it could be a new kind of a project which could lead to new capability, or the ones which had seemingly important for certain reasons. Leave aside the reason – “upon successful completion of project”, based on meeting the criteria and metrics, bonuses were awarded and pro-rata. Proved to be a key driving force. Bonus would be factored in the project margins itself. Criteria not met – bonus would not be paid. Project risks were identified and dealt separately. Risk identified were in terms of operation cash flows, motivation levels, that’s the only thing I can remember now.
...
1 reply by Vincent Guerard
Jun 04, 2019 3:22 PM
Vincent Guerard
...
Ganesh,

Seem like a good practice, the bonus are given after project completion. That to ensure project deliver the benefits expected before issuing bonus,
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May 30, 2019 5:44 PM
Replying to Vincent Guerard
...
I understand what is the benefit of the project. And I agree that it would be for the owner after project delivery. For the executing company, the revenues and profit are within the project execution (till completed).

All depend on the side your in. Private company executing project for other need to make the revenue in the project. The client/owner should expect the benefits in the following years (increase in sales, or reduction in cost....)

In both case, how can you organize a bonus to the PM so to maximize project success?
Vincent, my intenttion was not said you do not understand that. Sorry if my previous comment was not write in the right way. Just to comment, Always a project is executed for getting more money. Becasue most of the times I worked leading initiatives that was technological or business model not proved at the time somebody hired me (in the last time Agile for example) I worked where a hugh component of my final earning was tied to initiative benefits. But in this case I took control of the defintiion of the solution too. Not about the activities needed to define the solution (activities to do that are in charge of PM), about the solution requirements for example and strategy analysis (so, more closely to BRM or business analyst). My point is you can not accept something that is out of your control as project manager if you do not take part of the role duties related to the role that are in control of it (for example BRM or business analyst). That is my point. Just to comment, that is a debate I performed when I was part of the group of authors/reviewers of the new PMBOK when table 1-2 was created. How to organize the bonus? Putting bonus objetives stated in SMART way for the project manager related to those things she/he is able to be accountable for: creating the product/service/result as defined (scope and quality), in the time frame needed because the opportunity window (time) and inside the estimated cost because cost is a component of benefit/revenue/profit calculation (cost). Beyond that if the project has other constraints like take care of the environment (for example close to GPM way of management projects) then those must be included.
Network:115400



May 31, 2019 12:41 AM
Replying to Ganesh
...
Hi Vincent, in my limited experience, we being a service provider, project bonus were given only to certain type of projects, such as mission critical projects, or it could be a new kind of a project which could lead to new capability, or the ones which had seemingly important for certain reasons. Leave aside the reason – “upon successful completion of project”, based on meeting the criteria and metrics, bonuses were awarded and pro-rata. Proved to be a key driving force. Bonus would be factored in the project margins itself. Criteria not met – bonus would not be paid. Project risks were identified and dealt separately. Risk identified were in terms of operation cash flows, motivation levels, that’s the only thing I can remember now.
Ganesh,

Seem like a good practice, the bonus are given after project completion. That to ensure project deliver the benefits expected before issuing bonus,
Network:115400



Sergio,

I think we say it differently, and there is in my opinion two project contexts internal and external(contract).
In the internal case, bonus can be base on the benefits of the project, that can occur in the following months, years.
In the external project, at the contractor level, the bonus needs to be base on other indicators the project benefits to the client.
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Hi Vincent
I am reading an excellent book by Daniel H Pink called "The Drive"

He describes two kinds of Leadership behaviors namely Motivation 2.0 and Motivation 3.0
Motivation 2.0 is a behavior widely practised by leaders in the 19th century which is the "extrinsic Motivation" rewards like Bonuses , increased pays IF you perform well . in other words they were the IF-THEN rewards.

In the 20th Century however we are increasingly encountering Motivation 3.0 where IF THEN rewards are actually counter productive . Our performance is based on three Elements

1) Autonomy :- To complete the task "our way" where we are satisfied and feel fulfilled with the outcome without any extrinsic expectations .
2) Mastery :- we practise hard at our work and we strive for that elusive mastery , knowing fully well that we can never become complete mastery at anything we do. It's the thrill of setting out to achieve the impossible that keeps us in the "Flow"
3) Purpose :- Whatever we do , there must be a purpose for us doing that task . You cannot "make" someone do something if they themselves don't see a Purpose in doing it


In summary , maybe getting motivated by a reward or bonus system may make the employees work harder, but only for a short time .

1) Soon they will begin expecting rewards for everything they do and if you don't give the rewards, the performance will suffer.
2) On the other hand , because they are purely working for rewards, they may overlook innovation or overall process improvement or future proofing their work in their myopic vision to only do the bare minimum required to get the bonus here and now .

In other words , encourage everyone to do their best and give them positive targeted feedback like "John , i think the way you produced that design was innovative , articulate and included particular focus on XYZ " instead of "John , you did well on the project."

You can treat the team to a lunch after a successful project but do not have to tell them that you are going to treat them to lunch beforehand IF The project is finished on time and on budget
...
1 reply by Vincent Guerard
Jun 05, 2019 12:59 PM
Vincent Guerard
...
Thanks for the book reference, I will look it up

I say bonus work for the short term, that is very interesting. That is the one thing I find in bonus, people will work in a short view to get a bonus. That may include putting the project at risk to get this year bonus!

Would love to find a more constructive bonus approach. That can reflect true effort. on a long project, you can make one year look good!
Network:115400



Jun 04, 2019 9:51 PM
Replying to Deepesh Rammoorthy
...
Hi Vincent
I am reading an excellent book by Daniel H Pink called "The Drive"

He describes two kinds of Leadership behaviors namely Motivation 2.0 and Motivation 3.0
Motivation 2.0 is a behavior widely practised by leaders in the 19th century which is the "extrinsic Motivation" rewards like Bonuses , increased pays IF you perform well . in other words they were the IF-THEN rewards.

In the 20th Century however we are increasingly encountering Motivation 3.0 where IF THEN rewards are actually counter productive . Our performance is based on three Elements

1) Autonomy :- To complete the task "our way" where we are satisfied and feel fulfilled with the outcome without any extrinsic expectations .
2) Mastery :- we practise hard at our work and we strive for that elusive mastery , knowing fully well that we can never become complete mastery at anything we do. It's the thrill of setting out to achieve the impossible that keeps us in the "Flow"
3) Purpose :- Whatever we do , there must be a purpose for us doing that task . You cannot "make" someone do something if they themselves don't see a Purpose in doing it


In summary , maybe getting motivated by a reward or bonus system may make the employees work harder, but only for a short time .

1) Soon they will begin expecting rewards for everything they do and if you don't give the rewards, the performance will suffer.
2) On the other hand , because they are purely working for rewards, they may overlook innovation or overall process improvement or future proofing their work in their myopic vision to only do the bare minimum required to get the bonus here and now .

In other words , encourage everyone to do their best and give them positive targeted feedback like "John , i think the way you produced that design was innovative , articulate and included particular focus on XYZ " instead of "John , you did well on the project."

You can treat the team to a lunch after a successful project but do not have to tell them that you are going to treat them to lunch beforehand IF The project is finished on time and on budget
Thanks for the book reference, I will look it up

I say bonus work for the short term, that is very interesting. That is the one thing I find in bonus, people will work in a short view to get a bonus. That may include putting the project at risk to get this year bonus!

Would love to find a more constructive bonus approach. That can reflect true effort. on a long project, you can make one year look good!
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