Write down the terms of the bonus before the period it covers starts (one harvest, one year, or any period you choose), and give a copy to everyone who can earn it. There are four terms: the goal the result has to reach, how much money the bonus pays, how that money is split between people, and the date it is paid. Written on one page, those four lines are the bonus agreement, handed over before anyone knows who will earn what. With the rule on paper before the work starts, the bonus is more likely to work as a reward than to start an argument.
At the end of the harvest, an owner decides to give something extra to whoever carried the crew. He works out the amounts in his head and splits the money by gut feel. One tractor driver is sure he earned more. Another finds out that a co-worker on the other machine got double. The bonus that was meant to pull the crew together ends in resentment, and the money has already been paid out. What was missing was a rule, written down before there was any result to argue about.
Why does a bonus decided after the results turn into a fight?
Because, with no rule set in advance, nobody on the crew can see how each amount was worked out. Every amount then looks arbitrary, and an amount that looks arbitrary feels unfair.
Research on bonuses in other kinds of work points the same way. Alex Bryson and colleagues, economists who pooled three surveys of workers in firms of all kinds, found that bonuses shared by a whole group were linked to higher job satisfaction, largely because of stronger loyalty and a stronger sense of being paid fairly; surveys show a link, not proof that the bonus caused it.
Yuyao Chen, of the business school at Nanjing University in China, and colleagues reviewed a hundred studies of pay tied to performance in 2022, in the journal Frontiers in Psychology. They found that part of the effect of that pay on how people work depends on whether they see the payout, and the way it was decided, as fair. Neither study was done on farms, and neither tested a written rule. Still, a crew that cannot see the rule behind a payment will find it hard to call the payment fair, however generous it is.
What goes on the one-page bonus agreement?
Four lines, and each one is a decision you make for your farm, not a figure set by law. You write them once, before the period starts, and hand the page to the crew. That page is the whole agreement.
| The line | What you set before the period |
|---|---|
| The goal | the level the result has to reach before anyone is paid, measured with a number the crew can change through their work |
| The amount | how much money the bonus pays: a fixed sum if the goal is reached, an amount per unit above the goal (per tonne, per calf weaned), or a percentage of a figure you can check, such as the crop sales or the farm’s profit for the period |
| The split | how that money is divided among the people who can earn it |
| The pay date | the day the money is paid |
Of the four, the split carries the most weight, because on the split line you decide who gets how much. That is where the argument in the harvest example started.
This agreement covers only the bonus, the money that depends on a result. Rewarding good work without money, such as a day off or praise in front of the crew, needs a written rule of its own, and a separate article explains how to write a recognition rule before the work starts. The fixed wage for each job, paid with or without a bonus, is another decision, covered in an article on how to set a pay range for each job and a written rule for raises.
Why write the split before there is a result to split?
Because once you know who did well and who did not, it is much harder to set a rule everyone will accept as fair: whatever split you choose can look as if it was made to fit the names. If you write the split first, you commit to it before anyone knows the outcome. On a fruit farm in the United Kingdom where economists led by Oriana Bandiera ran an experiment, pickers worked in teams. The farm paid “a piece rate for each kilogram of fruit picked by the team”, and each member got an equal part. Every picker knew how the team’s money would be split before picking the first kilogram.
Workers judge whether their pay is fair by comparing it with what others get. S. L. Fogleman, in a guide for farm employers published by Kansas State University, says fairness is the first thing to consider when setting pay: it has to be fair between workers on the same farm, and fair against what other farms pay. With a bonus shared inside the crew, the comparison with co-workers is the one that counts. Workers who were never shown how the split was made tend to suspect it is unfair, often before anyone complains out loud. With the rule written and handed over in advance, every worker can check their share against the page, not against a rumor.
What does a good goal line need?
The goal has to be a result the crew can change through their work, measured with a number you record. Otherwise the bonus depends on luck: the weather or the price decides whether it is paid, not the work. Teagasc, the Irish state agency for agriculture and food, gives dairy examples of such numbers, such as milk solids produced over a set period or the rate of mastitis in the herd.
Teagasc also lists what a bonus scheme needs. It should “be in writing and set realistic and attainable goals”. It should “clearly identify the baseline performance figure above which an incentive may be applicable”. And it should “clearly set out the means for determining” whether the payment has been earned.
On your page, the baseline is the figure you write on the goal line: the level the result has to pass before any bonus is paid. How the money is worked out goes on the amount and split lines. All of it is written before the work starts.
Teagasc also warns that a scheme can discourage the crew instead of motivating them: when a worker has little control over the number, or “if the employee sees the incentive as unfair or unachievable”. You deal with both problems on the goal line: write a number the crew can change through their work, and set it at a level they can reach.
When does a group bonus backfire?
When the split lets some people on the crew coast on the work of the others. That risk also depends on who chooses to work with whom. On the fruit farm, the pickers formed their own teams, often with friends, and the researchers explain that people are less likely to coast on a friend’s work. When the managers began posting a ranking of the teams, and later paid a cash prize to the best ones, fast pickers left their friends and teamed up with other fast pickers. That protection against coasting was lost.
Before you write the split, ask how it could change who works with whom, and whether it lets anyone ride on the others.
Two more risks come with a group bonus. First, crew members can keep each other from coasting by watching one another, but Bryson and colleagues note that a culture of watching each other can carry “detrimental effects on worker motivation and job satisfaction”. Second, if you tie the bonus to a number the crew can raise without doing the job well, such as boxes picked with no check on bruised fruit, you get the number, not the result. Choosing a number that cannot be pushed up this way is the subject of a separate article, how to test a bonus number before you pay on it, where you check the number on paper before it goes on the goal line.
What about the legal side of the payout?
It stays off the page on purpose. Ask your accountant whether the money counts as profit-sharing under the law, whether a union or collective agreement sets a minimum, how the bonus is taxed and how it goes through payroll. The answers change from one country to the next, and they can add requirements to the agreement. They do not replace the four lines: whatever form the payout takes, someone has to write the goal, the amount, the split and the pay date, and hand them to the crew before the period starts. The page is one of several written rules for managing the people on a farm, collected in the library’s articles on people.
Where to start
It takes about an hour and one page. No software.
A bonus split by gut feel costs you twice: you pay the money, and instead of pulling the crew together it starts an argument. With the four lines written and handed over first, the same money comes with a rule the whole crew saw before the result. For the other decisions of running a farm, beyond the crew, start at the farm management page.