3 Tips for Successful Employee Bonus Programs

09 Jun


If you haven’t planned an employee bonus program yet, it’s time you do so. There are many kinds of employee bonus and they can have a lasting impact on your business.

Bonuses are so important to a company’s success that almost three-fourths of businesses have some sort of bonus incentive.

However, it isn’t just about giving away cash—these programs need to be thoughtful and structured.

To start, you must determine if you have the resources to offer certain bonuses. For example, small businesses that do not have the funds for large bonuses may reward employees with small rewards like a $25 gift card. Larger, more established businesses may offer Ad Hoc bonuses, which are unexpected bonuses to show gratitude for exceptional performances—these bonuses could come in the form of higher monetary amounts.

You may also find yourself in a situation where you purchase another business and would like to retain its employees. While going through a merger, you could consider offering retention bonuses, which are typically 10-15% of an employee’s salary.

Whatever kind of bonus you decide to offer, it’s important that you have a planned, written bonus plan in place. Here are a few tips to get your bonus program off and running.

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What, Why, and How?

When developing your bonus program, it’s imperative that you can answer these three questions: What, why, and how?

It’s important for your employees to understand what kind of bonus program yours is. If you are offering a gain-sharing bonus for statistical improvements in production, you need to express what level of improvement you are seeking.

You’ll also have to explain why you are creating a bonus program and why it is set up the way it is.

Finally, be sure your employees have a good understanding of how they can obtain a bonus. Bonuses can be great motivators, but can also be de-motivators. This happens when employees are accustomed to bonuses and they see them as a right.

To deter this from happening, your “how” needs to be challenging, but not so challenging that it becomes impossible. Base the plan on quantifiable, measurable results. Specify what the goals are, how progress toward goals will be measured, and how often.

Simplicity is Key

Your employee bonus program needs to be universally understood within your company. Meaning, that when written out, employees from all departments and all levels shouldn’t be confused.

Any goals included in your program need to be clear and consistent. This is vital especially if you create a tiered program.

By creating a simple plan that your employees understand, it will be much more manageable for your leadership team to implement.

Fairness Matters

A bonus program is an exceptional method of showing your employees that you appreciate their hard work. They are also great encouragement for your employees to continuously improve.

However, if fairness isn’t at the top of your priority list while developing your program, employees will become disgruntled and feel less appreciated.

There are a few factors that could make a negative bonus program. For example, if a bonus is a group achievement, you need to be certain there aren’t any “moocher” employees, or, someone who doesn’t work as hard as their colleagues but benefits from the group effort.

The program must also be structured in a way that makes it uniform to all departments. You can’t offer your sales departments the highest value bonus while your human resources (HR) department receives a certificate (or a similar reward).

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Lastly, the bonus needs to have some level of significance. This isn’t to say all bonuses need to be $1,000 in cash, but if the reward is too small, employees will begin to feel cheated.

If you want to be positive that your employee bonus program will be successful, work with a professional employer organization (PEO) like VensureHR. a leader in the HR industry. VensureHR can provide expert insights and resources to get your program on the right track. Whether you need employee evaluation form templates, work from home policy templates, or burnout handbooks, VensureHR has you covered.

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