Harare — LESS than six out of 48 companies that were surveyed by a local consultancy firm, Industrial Psychology Consultants paid an annual bonus this month.

IPC managing consultant, Mr Memory Mguwi said most companies have deferred the payment of bonus to the first quarter of next year while some are not paying the bonus in the near future owing to cash flow problems.

"Those that have paid have done so mainly due to the need to comply with contractual obligations related to the payment of the 13th cheque.

"The bonuses paid have nothing to do with the performance of the individual or the company but merely fulfilling contractual obligations," said Mr Mguwi.

Some companies did not pay an annual bonus even in cases where it is contractual because of cash flow problems.

Going forward, Mr Mguwi said the only way bonuses can be sustainable is to link them to performance.

Added Mr Mguwi: "Companies should not wait until the end of the year to award bonuses but do this periodically in order to motivate staff.

"The Zimbabwean workforce needs reorientation with regards to remuneration management in general."

The current remuneration systems practiced by many companies are not sustainable.

The survey revealed that if these systems are not revised in line with both regional and international trends the country would see more people losing jobs because the current systems are not sustainable.

A few leading companies have already adopted remuneration systems used in the region and internationally and from our observation the system is working very well.

One analyst said that performing companies must first make steady profit before paying bonuses.

This also means that even Government should carefully consider its policies before issuance of the popular 13th cheque.

In Zimbabwe the concept of annual bonuses has constantly been broken because of engraved tradition that November is the bonus month even when companies are not performing.

Simply put, a bonus is a reward to employees for driving above expectations profits in a firm.

It is not mandatory that companies pay bonuses, but those making surplus earnings can pay even quarterly bonuses.

Recent results show that most companies are not operating profitably and are in real need of extra working capital.

But they face the spectre of an expectant work force looking forward to pocket at least US$400 of their tax-free annual bonus portion.

Now in the current environment such employee expectations are likely to face resistance from investors who are more intent on preserving cash.

Management may be tempted to pay bonuses even in difficult times just to fulfill tradition, but it may backfire in the New Year if the liquidity situation remains unchanged or worsens.

Most managers have already disappointed investors by foregoing dividend payouts.

For example, Government to pay bonuses this year it had to spend an estimated US$3,4 million out of its estimated 23 000 employees earning an average US$150 per month.

It is not clear how Government would fund such expenditure and yet for many years now it has not made any surplus and is looking into an US$810 million Budget deficit in fiscal year 2010.

Instead Government could use this money to improve social services until Budget deficit narrows to acceptable levels and adds a little more money into the national purse.

This is the predicament that non performing Zimbabwe companies face today, that of satisfying employee expectations or the bonus tradition against the need to conserve cash and remain afloat.

Giant American companies like Lehman Brothers collapsed last year in the financial crisis not just because of bad investment decisions but also due to poor management strategies.

Lehman and several American financiers were paying fat bonuses to employees and especially top management even when their books were in the red.

The companies have been widely condemned and accused of fast-tracking their downfall through such weak bonus policies.