>Why not give everyone the same bonus based on company performance? Make it collective good.
Because like all collective goods you suffer from the tragedy of the commons. If you work for a large company your individual contribution is so small it has a negligible effect on your bonus. Unless you're interested in moving up the management ladder the smart thing to do is just work hard enough to avoid getting fired. Of course not everyone will adopt this attitude, but enough will to affect the overall performance of the company.
Also your top performers will leave. People who are passionate about their jobs and put in long hours expect to be rewarded for their efforts. If you give them the same bonus as the guy in the next cubicle who's out the door at 5:00 PM sharp they're not going to like it very much.
My company used to have two bonuses - one based on individual performance and one based on company performance. A few years back the individual performance bonus went away and the results have been disastrous. Once you get a significant percentage of people slacking off the entire character of the office changes.
If you make the same as someone that leaves at 5pm sharp, you don't have to like it. If monetary compensation is your motivation for staying later, you're likely making the wrong choice. Bonuses in those instances do set the wrong tone, though. I would consider getting the same as a non-performer just expected salary increases but its still a kick in the nuts either way.
Your last line is crucial and one my experience can echo. If you strip away incentives, ones that attracted people to your place to begin with, you can expect turnover. You might as well be walking then to the door. You can fool new hires to a degree until they hear that there were performance bonuses at one point and then the same resentment starts to grow inside them too. You're only real recourse is to have every one of the "old guard" leave so you can continue your downward spiral into cheapness.
Because like all collective goods you suffer from the tragedy of the commons. If you work for a large company your individual contribution is so small it has a negligible effect on your bonus. Unless you're interested in moving up the management ladder the smart thing to do is just work hard enough to avoid getting fired. Of course not everyone will adopt this attitude, but enough will to affect the overall performance of the company.
Also your top performers will leave. People who are passionate about their jobs and put in long hours expect to be rewarded for their efforts. If you give them the same bonus as the guy in the next cubicle who's out the door at 5:00 PM sharp they're not going to like it very much.
My company used to have two bonuses - one based on individual performance and one based on company performance. A few years back the individual performance bonus went away and the results have been disastrous. Once you get a significant percentage of people slacking off the entire character of the office changes.