Do bonuses REALLY motivate Product Managers and Product Marketing Managers?

We all know that money is a big motivator in the IT industry and it’s NOT just the sales guys (c’mon you code jockeys admit it!).  Aside from salary, and if you are not a commissioned sales person, bonuses usually constitute the primary monetary incentive for Product Managers or Product Marketing Managers.

And according to the 2011-2012 salary survey by Pragmatic Marketing, the average PM or PMM was eligible for a bonus last year of almost 14% of their salary.  The survey further broke down how bonuses were determined, with company profit, quarterly objectives, and product revenues the top contributors.

The question is: DOES a 14% (roughly $13.5k) bonus really motivate you?  Or more importantly for the company – does it impact your behavior, performance or productivity?

I think the answer probably depends on your personality, age, and financial situation – though 13 large is never anything to sneeze at.

In my experience in Product Management or Marketing – as a professional and manager, I have noted the following about these bonuses:

  • The company profit bonuses are nice, but they virtually have no impact on employee behavior (including PMs and PMMs) – I think that’s because the bottom line is outside the control of the average employee.  In fact I have seen these bonuses almost become entitlements at some companies – money for nothing.
  • Product revenue bonuses are nice, but have a double edge – first of all, some companies don’t even have clear accounting of revenues by product, and you can also get stuck with products that are discounted or given away when selling the flagship product.  This can be terribly demotivating to a PM or PMM.  You feel you literally have no control over your bonus situation.
  • Quarterly Objectives – fairly managed – can be extremely effective in terms of motivating you or your direct reports.  My objectives always fit on one page and I always print them out and post them in plain view at my desk.  It reminds me every day of where I should be spending my time and energy.  But to be effective there as to be good manager / employee interaction to set and review the objectives.

So that’s my 2 cents.  There’s more I could write on the subject of MBOs (management by objectives, but we’ll save that for perhaps another time).

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One Response to Do bonuses REALLY motivate Product Managers and Product Marketing Managers?

  1. The real challenge is that bonuses just as often encourage the wrong behavior. We’ve all heard about gaming systems and bonuses are just another system. Paying bonus on sales performance encourages short-term thinking. A bonus based on long-term objectives like company profit is so amorphous that it doesn’t affect behavior.

    So the age-old question is: what do we want product managers to do? What activity or work-product or result can we measure?

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