Bonuses act as motivators, rewards and nice ways to thank employees for helping you build your company. Even if you can afford only small bonuses, they let employees know you appreciate their work. Include these ideas in your approach:
- Bonuses should be linked to performance of the team, unit or individual against specific and measurable goals that are attainable
- Year-end is not the only time to give bonuses. Consider offering periodic rewards throughout the year for a job well done.
- Even a small bonus can mean a lot to someone, so don't rule out bonuses just because cash is short.
- When bonuses are given, make it clear that the payments are "extra" and may not always be available.
Make bonuses work for your businessBase bonuses on clear goals. Make the goals specific for the worker and beneficial to your company.
Keep the books on bonuses for tax purposesYour accountant or bookkeeper will need to know whether the bonuses were discretionary – not required – or non-discretionary, or linked with a contract or promise. Keep good records of what you give and its value.
Consultant compensation expertsIf bonus and other compensation questions have you stumped, consider a compensation consultant.
A variation: hiring bonusesStudies indicate that half of all technology and life sciences companies – even small businesses – use a hiring bonus program to attract hard-to-find job candidates.
- Bonuses should be equal among peer groups.
- Consider giving bonuses at any time of year for jobs well done.
- Reward behind-the-scenes staff, not only those who led the project or closed the deal.
- Be wary of cutting large, longtime incentive bonuses; employees who have come to depend on them will be angry and may even sue to get them back.
- To wind down non-performance-linked bonuses, tell employees that the money they would receive at the end of the year will go into their paychecks as a salary increase spread over the entire year.