Should You Revise Your Company’s Bonus Strategy?
Adopt a Robust Incentive Program to Maximize Your Workforce
Published by: Online Rewards Employee Recognition
Bonuses and incentives are tactics adopted by companies to improve employee efficiency. There are pretty effective employee recognition techniques when deployed correctly. Emphasis on correctly.
Unfortunately, these programs can end up becoming hindrances to the success of your business if they are not adequately planned and implemented. You should be careful when introducing new employee incentive programs into your business, as they could end up breeding frustration among your workers if not handled properly.
If your bonus program is costing your company a lot and you do not see the expected staff motivational boost, then it may be time for you to review your bonus policy. Let’s take a look at the reasons why you may need to revise your bonus strategy.
Performance Incentives or Bonuses
Many people believe that incentives and bonuses are the same—they are cut from the same cloth, as they are both ways of compensating workers beyond their regular income. But, they differ slightly. Bonuses are backward in orientation and are sometimes not connected to employee performance. They are awarded to recognize past achievements usually long after the employee reaches said achievement.
Bonuses have been used as a staff motivation tool for a very long time, but they have a weak motivating effect because they don’t make the connection between behavior and values. Also, bonuses don’t recognize the importance of a good working relationships between workers and their supervisors.
The two major types of bonuses are ad hoc and performance bonuses:
- Ad hoc bonuses are unexpected and unplanned, and they do not usually require any upfront commitment.
- Performance bonuses provide opportunities for employees to earn extra money by achieving specific goals. They need planning and budgeting throughout the specified task.
Incentives are forward looking because they affect performance more directly. Performance incentives have been adopted by managers as a motivator because they guarantee a better return on investment. Payment of an incentive is usually tied to the completion of a specific objective that has been communicated to the workers. Incentives can be given to individuals or a team, depending on the specified task.
Therefore, if you do not want to be left behind by the competition, you should adopt a robust employee incentive program to maximize your workforce.
How reliable is your employee incentive program?
It is just not enough to have a cash compensation package like bonuses and incentives; you have to consider some other things like the business goals, employee preferences, market trends, the desired behavior, and employee demographics.
It is also reasonable that you have a payment plan in place for the bonuses and incentives. If your incentive program lacks all these essential elements, then you need to go back to the drawing board and come up with a more suitable plan for your company.
Whether you decide to use bonuses or incentives in your company depends on the needs of your organization. One service that can help you with bonuses, incentives and employee rewards is Online Rewards. You should also consider the goals of your business, the culture of your organization and the preference of your employees.