Employees see bonuses as a fantastic way to keep them motivated. Employees put in the time and effort to earn the salary that has been agreed upon, but if they know that they will be rewarded for going above and beyond the requirements of their job descriptions, they will be more motivated to do so.
Glassdoor’s 2015 Employment Confidence Survey found that benefits and perks play a significant role in the decision to accept a job offer for 60% of respondents. According to the study results, a further 80 percent chose more benefits above a boost in wages. To design a bonus program for your employees, you should be aware of the types of bonus programs there are.
Types of Bonuses for Employees
Employee Referral Bonus Program
Even the best compensation plan for employees needs an excellent bonus program like a referral bonus. Adding a referral bonus to your rewards program is a terrific way to ease the burden on your HR department. When a current employee suggests a friend or acquaintance for a job, the employee receives a bonus. A lot of time and money is saved through referral programs for recruitment.
Staff Bonus Scheme – Cash
Neuroscientists discovered in a study that the expectation of monetary benefits activates the brain’s reward circuitry. Workers who complete a specified task are awarded a hefty reward in spot bonus.
Most of the time, the winnings are in the form of cash, with amounts ranging from $50 and up. However, employees are motivated to go above and beyond with their work because of the incentive provided by this bonus.
Employers reward their staff with a prosocial bonus for doing good deeds for nonprofits and coworkers. Research has proved that prosocial bonuses almost always increase employee satisfaction and team performance.
Researchers were able to quantify the financial impact of prosocial bonuses. To put it another way, sports teams that spent $10 prosocially won 12% more often than they did when their members spent it on themselves. Likewise, the company profited $52 for every $10 invested in prosocial activities on sales teams.
Profit-Sharing is among the most common employee rewards programs. Workers receive a portion of the company’s profits for a set length of time. It is a powerful incentive since it encourages employees to strive for greater heights of performance to earn large sums of money.
When it comes to creating incentive plans for employees, a sign-on bonus is an excellent idea. You can reward new employees with a sign-on bonus in the onboarding process. Athletes were initially targeted for this benefit, but many organizations now give comparable incentives to new employees. It creates a positive impression of the company and makes new hires feel appreciated.
Retaining employees is an increasingly important issue in the workplace today. Job opportunities abound in today’s economy, which is highly competitive. It means that if your employee isn’t happy with your working culture, they’ll be able to go in a matter of days. Therefore, you can give your employees a retention bonus to reward their loyalty.
It is the most common form of compensation given to workers by businesses. A holiday bonus is a reward given to employees at various times, such as Christmas and New Year’s Eve. In some companies, these bonuses might also come annually. Employees expect to get holiday bonuses. Therefore, you would be disappointing them if you didn’t have holiday bonuses.
According to a study, performance-linked incentive pay was positively connected with job satisfaction, organizational commitment, and trust in management. The majority of these commissions are offered to salespersons to increase sales for a company. In the sales sector, it is a significant source of compensation.
Your bonus programs for employees should include gifts as well. Gifts are pretty popular among employers. According to a study by German and Swiss experts published last year, gifts are considered more motivating than monetary bonuses for short-term employees. Moreover, they pay for themselves in the long run by increasing productivity.
Recommended Read: 50 Employee Recognition Statistics You Need to Know In 2022
Classifying personnel, most commonly salespeople, based on their performance and awarding them a bonus based on their rank is an excellent way to encourage employees. In addition, with ranking, sales managers can regulate the amount of money they spend on bonuses from the beginning.
Creating A Bonus Plan For Employees
Now that we have discussed the different types of bonuses let us understand how to create a bonus plan. Here is how you should create a bonus plan:
Publish the staff bonus scheme
It would help if you were transparent in handing out bonuses. You should document the details and then distribute them to all staff. The bonus program will be useless and ineffective if there’s no transparency. Many employees will feel that they got the short stick.
Base the Bonus on measurable results
The awards must be linked to certain performance metrics. Subjective opinions are not accepted. The standards must be quantifiable. They should be specific so employees and management understand how meeting these requirements affects their compensation.
Encourage staff to achieve goals
The rewards should persuade employees to assist the organization in achieving its aims. It is true that some employees solely work for themselves. It is a win-win for all parties to align the employee bonus plan with their financial goals.
Clarify the WHAT, WHY, and HOW
Specifically, it would help if you were upfront about what bonuses are being offered, why they are being offered, and how employees might obtain them. Identify the bonus. Employees may be misled if you do not explain why bonuses are awarded. They’ll be determined to improve, but they might be focusing in the wrong direction.
The incentive should be constructed to be fair and equitable so that the lowest levels are easily achieved. Setting levels too high means certain employees who don’t do well may not get anything. But, on the other hand, it ensures that everyone gets something, even small.
Recommended Read: Employee Recognition Program: The Complete Guide [2022 Updated]
The incentive plans for employees should complement a well-structured employees bonus program. Therefore, employers need to be mindful of their employees’ needs while creating a bonus program.