Big Bonus, Better Service?

If it were a movie, it might be called Revenge of the Doorman or else The Bonus that Backfired, done in the slow-mo violence style of director Sam Peckinpah. The scenario is simple: three men, one a doorman, break into a luxury apartment, feast on the absent owner’s food and drink, go berserk, and then trash the place.

It’s not a scene from Peckinpah’s Straw Dogs, however, but one drawn from real life. As recounted by sociologist Peter Bearman in his 2005 book, Doormen: “One weekend while Mr. [C. Bai] Lihme [who resided at 950 Fifth Avenue] was at his weekend house on Watch Island, the doorman John Healy, George Tiernan (the elevator operator), and a friend took the elevator up to Lihme’s apartment, snacked on a ham found in the icebox, drank some whiskey and Canadian ale, and systematically destroyed the apartment, smashing a Welte-Mignon organ…; destroying a priceless chandelier, [as well as] porcelain and glass; ripping apart [16th century] French tapestries; and, perhaps worse, slashing a Van Dyck and decapitating a Rubens. When arrested…Healy justified his actions by complaining that he was expecting a bonus and better tips than he had received.”

Although such extreme reactions are rare – this one actually happened in 1927 – holiday bonuses can be an annual nightmare for individual shareholders (and sometimes boards). When is enough enough, and when is it too much? More interestingly, what is the psychology behind the bonus?

Bearman, who spent years researching and writing his book about New York City doormen, notes that the reasoning behind an annual bonus is twofold: “People want to say thanks, and so the bonus is a ‘thank you’ for past performance; at the same time, people also feel that the bonus is related to the service one will get in the future. So, the bonus walks the line between a down payment and a thank you.”

Bearman explains that there is a subtle perception war in place, in which the bonus “encodes” the relationship between the individual residents and the staff. “Tenants who give more might be seen as worthier of service than tenants who give less or [who give] nothing at all; so thinking about status as the amount of service one gets, the bonus can have an effect there. At the same time, we do not give bonuses to our social equals – who tips their lawyers? So, the bonus is also a way of marking the status differences between tenants and doormen, and, in that way, encodes those differences – that is, brings them to light and fixes them for a moment.”

Partly because of that, some residents find it awkward giving bonuses for any number of reasons. Consequently, there are buildings that deal with that by putting a box in the lobby in which residents place envelopes with cards and bonuses. “The box (or other system for giving without interacting) allows the bonus to slip through time,” Bearman notes in his book. “The box facilitates a specific kind of timelessness – drawing the bonus into the social world. Equally so, the envelope and the card insulate the money from the profane world of economic exchange, helping to transform the cash into a gift, into something demarcated from ordinary exchange. And crisp new large bills unsullied by prior exchange help as well to distinguish the money in the bonus from regular money– and thus declare that this bonus is a gift, independent of instrumentality.”

As he states in Doormen, Bearman feels that “excessive giving is easily interpreted as an attempt to transform an employer-employee relationship into a master-servant relationship. While one garners status from giving, for the bonus, as in love, too much giving can lower the giver’s status and delegitimize the intended meaning of the gift.”

For a board, however, the tipping is less psychologically demanding, since, as he says now, “the board is not trying to distinguish itself from other tenants.” It can frequently use a simpler, more business-like formula: one to two weeks’ pay for the super, for instance, and variations on that for the doormen and other staffers (see box, “So, How Much?” on p. 44).

As for the Revenge of the Doorman scenario caused by a miscalculated bonus, Bearman notes that it occurs in more subtle ways, such as failing to provide extra services: “Doormen are professionals and so they will do their jobs; but the extras – not so likely.”

In the end, then, how do you calculate a bonus? “There are lots of ways,” observes Bearman, “but, of course, the best way is to try to learn what others give and then position oneself in the top quarter of the distribution. No one wants to give too little, or too much, so the trick is knowing what your neighbors do.”

Whatever you give, however, Bearman warns, make the figure simple. “Do not give a non-round number, such as $56.25.” No one likes a smart aleck – and who wants all that change, anyway? Happy holidays!