Financial Bonuses $ – The Double-Edged Sword
With the recent passing of another financial year, bonus season has arrived!
After a couple of lean bonus years due to Covid, expectations are on the rise. Many people see a bonus payment as a way to get ahead on things like their mortgage, as their regular wages cover living expenses for the year.
Well-designed and administered bonus schemes have been proven to increase productivity, effort and performance. The flow on benefits include job satisfaction, morale and retention. In the context of a candidate-short market, retention is a point not to be missed.
The concept of a performance-based bonus is simple but the application can be a minefield.
The result can be disappointing, leaving individuals deflated and disengaged – the very opposite of the intended purpose.
Here are 5 tips to getting it right:
Simple is best – the more elaborate you get, the more complicated it will be to calculate.
Involve the individual – tailor the bonus to the role and set realistic targets.
Include behaviours – it is not just about getting results but how they are achieved (consistent with company values).
Communicate regularly – don’t wait the end of the year to discuss progress – this allows time for remedial action.
Train your managers – evaluating someone’s performance is a big deal and is magnified when money is involved.
If you enjoyed this article and want to learn other non-financial ways to increase your team’s performance, check out Yvette Martin’s article on three ways to boost team engagement.