Get rid of bonuses to salary management. Pushing numbers at the expense of quality to customers is not worth lining the pockets of the worthless. 3m greed at the finest.
15 replies (most recent on top)
I make more than hourly and I'm complaining I didn't make more bonus but I literally do less work than hourly employees. I'm crying about it.
I support giving production employees the same "bonus" program (AIP / Annual Incentive Plan) that 3M implemented for salaried people many years ago. We aspire to be an inclusive company, so maybe we should apply the same compensation principles to all of our valued employees.
First of all, hourly employees need to understand that AIP is not a payment bump above and beyond what the employee's job has historically paid. (Sorry if you were expecting a big raise, but that's not how AIP works.) If 3M has a job opening where the market rate of compensation is $100,000, they don't offer the person a $100,000 fixed salary plus variable pay of $7,000 (7%). Instead, they would offer a $93,457 fixed salary plus target variable pay of $6,543 for a total planned compensation of $100k. Note the $6,543 variable pay target is 7% of the $93,457 fixed salary not 7% of the $100,000 total. This percentage isn't 7% for every salaried employee - it varies by job grade. This is common at other companies as well.
There is no free lunch from 3M out of the goodness of their heart. They call it an Incentive Plan, but I don't know many employees who actually feel incentivized by it. It is mainly a way for the company to manage cash flow. In a year when sales and profits are down, 3M pays out less in AIP and that makes the books look better than they otherwise would. When sales and profits are above forecast, they can afford to pay out a little more in AIP and still meet the Wall Street estimates.
So would you rather get paid a fixed $15 an hour or get $14 plus a $1 lottery ticket for every hour you work?
Here's how AIP could apply in production:
- Seven percent of your pay will become variable pay within the AIP. For example, if you are currently making $22.00 per hour, your new wage will be $20.56 per hour ($1.44 / hr pay cut). It may seem like a lot, but 3M would likely advise you that if you put a little effort into budgeting and stop buying things you don't really need you can get by on less until the bonus payment is made the following year. 3M even offers complimentary access to an Ernst and Young financial planner if you need help adjusting to a smaller paycheck.
(To ease the pain, the company could reduce hourly pay by 4% the first year and then instead of giving a 3% pay raise in the second year they would just put that money into the AIP variable pay bucket so it totals 7% of pay. Or maybe just not give out any hourly pay raises over the next 3 years until 7% of pay is in the AIP. Either way, you aren't getting a pay bump this year just because you join the AIP "bonus" program.)
- Each March, 3M will compare your Big B's actual sales and operating income against the plan (goal) for the previous year. If sales and operating income exactly meet the goals, you will get a check for the number of hours worked during the plan year times the $1.44 per hour pay cut that you took. If actual sales and operating income are below the goal, you will get a smaller payment. If results are significantly below the goal, you won't get anything. Only if actual business unit results exceed the goal will you get back more than the $1.44 per hour that they took away from you.
So let's say your AIP business unit had $500 million of sales and generated $100 million of operating income during 2022. When the executives put on their rose colored glasses and made plans for 2023, they decided the plan / goal should be an 8% increase in both numbers (i.e. $540 million of sales and $108 million of operating income in 2023). At the end of the year, the actual numbers come in at $530 million and $106 million (a 6% year over year improvement in both numbers). Unfortunately, that 6% increase is less than the 8% goal that was set for the year. So you will be getting less than the $1.44 per hour bonus payment that you were anticipating even though the corporation made 6% more in profits.
But what if the economy is booming and sales and operating income both come in 10% higher than last year. 10% is bigger than the 8% goal, so now you're finally bringing home a bigger bonus check than planned - at least for this year. But the fact that 10% gains were so easily achieved is not lost on the executive team so next year the goal will be another 10% growth (or maybe more). "We've proven we can do 10%, so let's all raise the bar and dig a little deeper to deliver 12% next year!" An old, slow-moving conglomerate like 3M just can't deliver the kind of growth year after year that our optimistic executives and the Wall Street boys dream about.
- The AIP payment is made based on the performance of your Big B (made up of thousands of employees). It is not based on your personal productivity or the performance of your department. Even if your entire plant meets all of it's quality, customer service, productivity, yield, safety, energy reduction, and other goals, it does not mean the entire Big B will meet its' goals and therefore you are not guaranteed to get more than the expected $1.44 per hour of bonus pay just because you worked hard.
- Let's say you run your process 10% faster than the other crews that operate the same machine, have less waste than they do, and work through your breaks to make sure orders get completed and shipped to the customer on time. Meanwhile, your counterpart who runs the machine on a different shift walks around the plant talking to people 2 hours per day, runs the machine as slow as it will go, has higher waste, and never misses the opportunity to take an extended break. If you're both the same job grade and clock in for the same number of hours during the year, you will both get the same bonus payment next March. Exactly the kind of incentive system that motivates us all to work harder! :)
- If you quit or get fired anytime before the end of the year, you lose your entire AIP payment for the year. Let's say your supervisor comes out on Dec 15 and tells you "Sales are way down this quarter so we don't need you anymore. Turn in your badge before you leave today." It doesn't matter how hard you worked during the past 11.5 months - you still won't be getting a bonus check for the year. Perhaps you need to quit your job mid-year to take care of an aging parent or a sick child? Don't expect a prorated AIP payment for working part of the year because there's no such thing. (Note that if you are retirement eligible and retire part way through the year, your AIP will be prorated based on the portion of the year that you worked.)
- Let's say you work in a department where sales for the products you make skyrocket due to the addition of new customers. The entire team is working overtime to keep up with demand. You're changing the way you do things to drive productivity and yield improvements. These improvements lead to a huge increase in operating income for the particular products that you make. But the overall economy isn't doing as well and slips into a recession for the rest of the year. Sales for the majority of 3M products drop way below what the executives projected for the year and operating income plummets. Your plant manager comes out to personally thank you and your coworkers for your hard work to keep up with skyrocketing customer demand for your products. But even though there was nothing you or your coworkers could do to keep the world economy from going into a recession, all AIP participants will be getting a smaller AIP payment than they were expecting for the year (or maybe nothing at all) because the Big B results were below plan. Maybe you were counting on that AIP money to help with your son's college tuition or to pay for your daughter's braces. If you were still making a guaranteed $22.00 per hour these expenses might be less stressful for you. But now that you're in the AIP program, you can't count on getting any bonus money until after the year is over and the results are calculated.
As a salaried employee who has 7% of my annual pay in the AIP, I will tell you that I have received less than the advertised 7% of pay in 3 of the last 5 years. My 5 year average is 85.3% of plan meaning I only received about 5.97% of pay instead of the target 7%. Basically I've averaged a 1% pay cut over the last five years. I'm not starving and I'm able to pay all my bills, but I'd rather donate that 1% to a food shelf or charity of my choice instead of giving it to 3M. If 3M would give me the option to go back to 100% fixed salary instead of 93% fixed plus whatever portion of the 7% they feel they can afford to give me I would do it in a heartbeat.
If any hourly employees still want to give up a fixed hourly wage to get in on this lucrative "bonus" program called AIP, then by all means rally your coworkers and go see the HR manager to demand your fair share. Just be prepared to be disappointed by the actual payout you receive.
"The m0r0n defending the bonus has it @$$ backwards too. If it's not guaranteed then it's not part of your salary. Your base salary is 0% aip. Anything more is a bonus."
So let's take away 10% of your pay during the year and offer that we MIGHT give that money back to you at the end of the year IF the company meets it's financial goals and see how you like it. Will you be jumping for joy because you just got a bonus?
That's what happened when AIP started. What was 100% "guaranteed" salary was cut to 90% fixed salary plus 10% variable pay in the AIP "bonus" program.
The m0r0n defending the bonus has it @$$ backwards too. If it's not guaranteed then it's not part of your salary. Your base salary is 0% aip. Anything more is a bonus.
No. It's in the plants. It's simply a $hit thing to have period. When your mindset is just to make an incentive then you take unethical shortcuts, cut back on quality, and push employees too hard for your own personal gain. It's horse$hit. If you're going to give it to an employee then give it to the ones increasing income. Why does a waitress make tips? Because they make less. Your boss makes way more than you. They don't need a bonus. Give it to the lesser paid employees who do the work. @$$ backwards. No motivation. 3m greed. 3m failure.
Salary Supervisor who takes heat over the "Bonuses" I receive from Hourly Operators. We get an AIP (Annual Incentive Program) payment once a year in March. When we accept our positions, this total figure is factored into our Total Compensation based on your Business Group. This year we got around 60% of plan for the AIP so I made less than 3M told me I would in my Total Comp. To some it's considered a "bonus" to other's it's considered a part of their yearly salary that 99% of the time they don't see because 3M doesn't perform at the successful rate to meet 100% for AIP. So when people are talking Bonuses...I believe that it's Upper Management and NOT a majority of Salary within the physical plants running production.
When I exceed productivity my boss gets the bonus. Not me. A$$ backwards 3m.
You are being groomed! Oh yeah the next bonus will always be higher until it is not. Well known street wisdom techniques. P(sh)eople will always follow. DD techniques coated with a corpo fluff.
Being a more recent hire when AIP had already been around for many years, I’ve always called it a bonus, despite my initial hiring manager trying to convince me “it’s basically guaranteed.” 3M leadership seems to shy away from calling it a bonus, but that’s what it is. Taxed like a bonus? Can pay out 0%? It’s a bonus.
I do however find it extremely weird, maybe borderline shady, how 3M always pitches the “total cash compensation” and then there’s the variable % of AIP. Most corporations call out a base salary with bonus target %. I also wonder if for benchmark purposes 3M is comparing the total cash compensation (base salary + AIP) versus other companies base salaries. Would help explain 3M’s compensation decline over the years.
And for the folks who have been around longer I completely understand how they say it’s not a bonus. My understanding on the rollout is they actually took a portion of your base salary and just made it variable, thereby decreasing your base salary.
When AIP was first handed out to lower level salaried, we went without raises in our salaries for three years while the comparable dollar amount went to AIP. Basically you got your AIP in arrears if the company or your business did well. At some point, an adjustment was made in the program that was not good. Well, as we all know, if you need to be called together for something new to be explained to you, you know you are about to get screwed. Some angry VP came along and had the nerve to call out AIP a “bonus”. That didn’t go over well and he stormed out of the cafeteria all red faced. lol
MR should have to return all of the money he has stolen from shareholders during his tenure.
Is it actually a bonus when it is taken out of their earnings all year and then partially returned depending on performance? Sounds like the same process as taxes but only if your "dependents" do good will you get a "return".
AIP for salaried employees is way down this year.
This should have already happened. Why pay bonuses for not meeting financial targets or goals?