Any time employees are recognized for a job well done, it’s good for business. And an effective employee bonus program can help reinforce the message by rewarding positive performance.
Sure, a steady paycheck is the main reason employees clock in every day. But if that’s where your compensation strategy ends, you might want to consider installing revolving doors.
Money well spent
Rewarding stellar performance can help spur employee engagement and reduce turnover. An employee who is satisfied with their compensation arrangement has no shortage of motivation to succeed and little or no motivation to leave.
For the business owner, this means spending a little to retain your current stars instead of a lot when one of them hits the road. The costs associated with turnover, often tens of thousands of dollars, include:
- Lost productivity while the position is vacant
- Recruiting (job advertising, resume screening, interviewing, background checks)
- Onboarding and training a new employee
Sometimes turnover is inescapable – take retirement, for instance – but an attractive employee bonus program can help you fill the gaps with the best candidates. It might also be one of the reasons your company is the greener pasture, effectively bolstering your recruiting efforts.
It takes all kinds
Employee bonus programs come in many forms, but the most important thing is finding one that fits your business.
- Profit sharing – By rewarding individuals based on the overall performance of the company, they feel like a valued contributor and may be motivated to improve their own performance.
- Year-end bonuses – These are often tied to individual performance milestones and are paid out in one lump sum.
- Production-based bonuses – Rewards based on meeting or exceeding goals, whether monthly or quarterly or however often, can create healthy competition that contributes to a better bottom line. These bonuses can even encourage cooperation among team members, building a more amiable workplace environment.
- Non-cash bonuses – From gift cards to travel deals to flexible scheduling to telecommuting opportunities to extra days off, there are plenty of ways to show your appreciation without spending a lot of money.
Once you’ve settled on the kind of employee bonus plan you want to implement, there are a few things to keep in mind.
First, communication is of the utmost importance. Let employees know what the bonus is, how much it is and when they can expect to get it.
Second, don’t lump bonus pay in with regular pay. Give it separately and on a different day, say, Monday, when everybody could use a little pick-me-up.
Finally, make a point to reevaluate your bonus program to keep it aligned with the business’s goals and ensure its effectiveness at the employee level. Measuring the program’s ROI helps leaders in your HR and compensation departments justify its cost and perhaps make a case for spending more.
Establishing an employee bonus program doesn’t have to be difficult. Click here to see how Insperity can help.