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A thoughtful, high-value employee bonus program can help make the difference between struggling to recruit<\/a> and retain talented employees<\/a>, and having a workplace that employees never want to leave<\/a>. That\u2019s especially true in job markets that are tilted heavily in favor of job candidates.<\/p>\n But before you dive in and implement an employee bonus program, it\u2019s important to consider your options, evaluate what\u2019s best for your company and find what\u2019s most valuable for your people. Here\u2019s everything you need to think about at the outset of this journey, or if you\u2019re in the process of reviewing existing plans.<\/p>\n An employee bonus is a form of payment \u2013 most often monetary \u2013 in addition to an employee\u2019s base pay. Employers usually offer bonuses to employees for a specific purpose (for example, to reward certain behavior or to recognize the achievement of established goals).<\/p>\n For employees, bonuses are very popular because they represent an opportunity to earn more money beyond what their salary or hourly rate dictates. Most people want more money if the opportunity presents itself, right?<\/p>\n A well-structured employee bonus program may help your company:<\/p>\n For employers and employees, employee bonuses should be a win-win situation.<\/p>\n There are many different options for employee bonus programs. These options can be implemented individually or in combination with each other.<\/p>\n Performance-based bonus<\/strong><\/p>\n Spot bonus<\/strong><\/p>\n Sign-on bonus<\/strong><\/p>\n Retention bonus<\/strong><\/p>\n Referral bonus<\/strong><\/p>\n Project-based bonus<\/strong><\/p>\n Non-cash rewards<\/strong><\/p>\n Your employee bonus program must align with your company\u2019s business strategy and goals, as well as your compensation policy<\/a>.<\/p>\n Additional considerations:<\/p>\n As you go through this exercise, also keep the following in mind:<\/p>\n Don\u2019t just come up with a bonus program that you would want as an employee or that you assume will work best. You\u2019re not trying to motivate yourself, and your baseline for a good bonus program might not match that of your workforce.<\/p>\n Instead, approach the issue from your employees\u2019 perspective. Consider what your employees \u2013 the recipients of the reward \u2013 want. What type of reward will be the most effective in obtaining the results you want for the company and<\/em> keeping employees engaged and happy?<\/p>\n The bottom line: Any bonus program must be meaningful and hold value for your employees. Otherwise, a bonus program will be a waste of time, effort and money \u2013 and won\u2019t produce the desired results.<\/p>\n Ask yourself these types of questions:<\/p>\n Solicit feedback from employees by asking them directly or issuing an employee survey<\/a> on the topic.<\/p>\n For fairness and transparency, and to protect your business against adverse action from disgruntled employees, you must specify:<\/p>\n There should be no ambiguity surrounding who did or didn\u2019t receive a bonus, and why.<\/p>\n Much like other HR documentation<\/a>, everything about your employee bonus program covered above should be put in writing \u2013 ideally, as part of your compensation policy.<\/p>\n A written explanation of your bonus program can serve as a handy reference for employees, should they have questions or concerns. After all, it\u2019s a lot of information for employees to process and remember. You don\u2019t want to constantly receive a flurry of emails in your inbox about bonuses.<\/p>\n It encourages clarity, transparency and consistency in implementation. Creating documentation eliminates surprises and confusion when bonuses are issued. Everyone has the same information at the same time, understands the rules and knows in advance what\u2019s expected of them to receive a bonus.<\/p>\n Most importantly, it protects your business from claims of unfairness or discrimination.<\/p>\n Communication of clear objectives from management to direct reports is crucial. Employees shouldn\u2019t miss out on a bonus because of misunderstandings or lack of awareness about expectations of them.<\/p>\n This is particularly true for frontline supervisors managing employees who may not have access to technology to review performance assessments and progress toward meeting goals. As a general best practice, managers should schedule regular, one-on-one meetings with employees to make sure everyone is on the same page.<\/p>\n An employee bonus program is one of the most powerful tools employers have to better recruit and retain employees while improving morale, satisfaction and productivity, and helping businesses achieve goals. There are many different types of monetary bonuses to choose from, in addition to non-cash rewards.<\/p>\n To be successful, an employee bonus program should align with business strategy and compensation strategy, along with other key considerations. Selecting and implementing a bonus program should also involve examination of employee preferences, clarification of eligibility, requirements and frequency of bonus distribution, documentation of the program and regular communication.<\/p>\n Ultimately, the best employee bonus program is the one that is feasible for your business over the long term and most effective for motivating your employees.<\/p>\n To learn more about employee offerings that can positively impact your workforce and company, download our free magazine: The Insperity guide to employee benefits<\/a>.<\/p>\nEmployee bonus programs defined<\/h2>\n
How employers benefit<\/h2>\n
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Types of bonus programs<\/h2>\n
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Creating and tailoring your employee bonus program<\/h2>\n
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1. Understand what drives your employees<\/h2>\n
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2. Clarify eligibility, requirements and frequency<\/h2>\n
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3. Document your program<\/h2>\n
4. Communicate regularly about performance and goals<\/h2>\n
Summing it all up<\/h2>\n