Create a Stellar Employee Bonus Program With 4 Simple Steps
This article was updated on June 12, 2018.
A well-considered bonus program can help drive the sort of value-creating behaviors and culture your business needs to grow. Conversely, getting your bonus scheme wrong can incentivize employee behaviors you don't want, such as a "me-first" attitude and a focus on quantity at the cost of quality.
Here's how to set up the kind of bonus program that can help your business grow and motivate your employees to strive for success.
1. Define What You're Looking For
What drives the success of your business, and what behaviors are essential to those drivers? Make these the "key performance indicators" (KPIs) you reward with your bonuses. For example, if you want to motivate outstanding customer service, then track and monitor levels of customer satisfaction as a KPI and align incentives accordingly. Or, if collaboration is a key driver of success, then create incentives that reward team performance rather than individual performance. That way, you can help foster the collaborative environment you seek.
2. Mix Up the Timing
Timing matters when it comes to motivating human behavior. Often, the rewards that have the most impact are those that are given shortly after a worthy action is performed. You could offer an annual or quarterly bonus to those employees who consistently offer the best customer service, but you might also offer an immediate "spot bonus," such as a $50 gift card, to an employee who goes above and beyond to deliver excellent customer service in a single customer interaction. Communicate bonus policies to all employees, and ensure they are applied consistently across the workforce.
To ensure that outstanding performance is rewarded at the appropriate time, you can empower your supervisors to award spot bonuses in accordance with any discretionary bonus policies. Spot bonuses can also help inspire some healthy competition.
3. Make It Meaningful
While having their photo on the wall as "employee of the week" may be a nice perk, employees generally prefer recognition in the form of cash, gifts or paid time off. If you're not sure which bonus awards your employees value, then ask them directly or conduct a survey. While a bonus usually involves a financial reward, non-monetary recognition should also be used frequently to acknowledge and celebrate the behaviors you've identified as key drivers of success.
4. Keep an Eye on Your Culture
It's not out of the question that a bonus program aimed at stimulating individual goals will lead to negative competition. You need to be constantly aware of the alignment between your bonus scheme and the outcomes you're hoping to drive; misalignments can happen quickly and require immediate correcting. Monitoring your bonus program to ensure its alignment with key, growth-driving KPIs is a complex and ongoing process, one you'll need to revisit frequently.
Employee engagement and human motivation are complicated topics. It may not be easy to strike a balance between offering the rewards your team values and keeping your business goals (and finances) in check, but the benefit to both your employees and your business can be substantial. Spend some time looking at your budget and your mission statement. Once you know what you're looking for and what you can offer, start seeking input from your workforce.