Bonuses have long been a business tradition. And, to a degree, they work.
You work harder, the business makes more money and, in return, you end up with a fatter payslip – simple and satisfying, no?
Not always. As we’re often reminded, there are two certainties in life: death and taxes. The latter will always dampen the bonus party spirit, because one look at your shiny, sizeable payslip will reveal that much of what you’ve earned in addition to your base salary has been gobbled up by the tax man, leaving a somewhat menial take-home fee for all the blood, sweat and tears you’ve put in recently.
Money comes and goes. It enters your bank account each month and then quickly dissipated as life’s many expenses vie for its attention. There’s no doubt about it – as a way to incentivise staff, cold, hard cash isn’t always the best way to go about it.
Unfortunately, too many businesses rely solely on bonuses to reward employees, and in doing so, they’re in danger of driving people out of the business rather than retaining them for the long term.
People want more than money for their efforts, and modern society demands a more inventive approach to employee incentives. We’re going to dig into the topic in this post, and offer some compelling reasons why your organisation needs to change the way it rewards its staff.
Why change staff incentives?
How happy are your employees? Do they appear content on the surface, yet occasionally give off signs that something isn’t quite right? Is staff turnover higher than it should be? If so, there’s a chance something far more concerning may be bubbling away under the surface.
Incentives in business are designed to do two things. Firstly, they say “thank you for going above and beyond” and demonstrate that the business has noticed and appreciated the efforts of a particular individual.
Secondly, they aim to increase loyalty among staff. When a business goes above and beyond with its incentives and rewards, it shows it cares about its staff and wants them to stay for as long as possible.
Get incentives wrong, and the lack of a heartfelt “thank you” will severely dent the chances of building that all-important emotional connection between employee and company. And that stands to reason; why should an employee hang around if they’re not being properly incentivised? The job market is fiercely competitive, and there are plenty of alternatives.
If you’ve relied on the same bonus and reward structure for years, it’s time to change the way you incentivise staff – before you lose them for good.
The rules of business incentives
Depending on the position you occupy within the company, you’ll probably have had first-hand experience either managing a reward scheme or being on the receiving end of it. We’d also wager that you’ve experienced the way in which poor reward schemes end up doing nothing more than taking up oodles of expensive employee time.
Thankfully, there are some rules when it comes to business incentives. And, unlike many of the cumbersome schemes they attempt to fix, they’re nice and concise. In fact, there’s just six:
1. Reward everyone
No – everyone
This is a classic mistake many businesses make.
Think about the reward scheme you have in place currently. Who does it reward, exactly? There’s a strong chance it’ll only be employees who sit below management, because the latter are paid more handsomely for their efforts.
If this is the case in your organisation, you need to change your reward scheme to include everyone. Consider how you can incentivise managers to move beyond their job description and become leaders – they deserve it just as much as everyone else.
2. Reward behaviour
Most staff incentive schemes are based on rewards for outcomes. A particularly successful tender, new partnership or product development are perfect examples of times when rewards are justified, but businesses need to look a little deeper than that when it comes to incentivising staff.
It’s vital that you also reward behaviour. If a particular employee is demonstrating a desire to go above and beyond their remit every single day, their behaviour should be rewarded.
3. Reward under the spotlight
When someone does a particularly great job or displays exemplary behaviour, it’s vital that you reward their efforts under the glare of the spotlight – don’t do it in private.
For an incentive scheme to proliferate throughout the business and become something every employee wants in on, you need to reward publicly. Don’t be afraid to make a big song and dance about an employee if they have gone above and beyond – any feeling of embarrassment will be countered by one of pride on behalf of the company and the employee in question.
4. Reward every day
Incentives in business should never stop – they need to be ever-present if they’re to have any kind of positive effect on the success of the business.
There’ll be something to celebrate within the four walls of your business every single day, no matter how small it may appear to be. Sniff out those opportunities constantly and make sure staff are incentivised continuously – not just once in a blue moon.
5. Make sure the majority of rewards are small
It’s not always possible to keep an impending reward secret, and if word gets out that someone is in-line for a bonus, the fact that the reward is likely to be small will douse the flames of any Chinese whispers.
The majority of rewards the business issues should be small; save the big stuff for the monumental examples of staff success, and when those moments arrive, they’ll be even more cherished.
6. Never promise rewards
Staff are best incentivised when they receive unexpected rewards. Offering even the smallest hint that something might be on the way will be enough to diminish the effect of presenting it.
Most people like to be surprised – particularly if the surprise in question is a big “thank you” for their hard work. If something is promised, expectations will rise and, almost inevitably, by dashed come the big day. Don’t make that mistake – keep all impending rewards secret.
As previously noted, money shouldn’t be considered the primary way of rewarding staff. You need to be a bit more creative than that.
There’s a fabulous trade off here for businesses, too, because if budgets are tight and the bonus scheme is proving to be an overhead that is increasingly hard to bear, the following ideas will help lower staff costs and increase their satisfaction levels. Business nirvana, if you like:
• Offer a personal perk.
Swap a bonus the tax man will quickly swallow up for an unexpected trip to the cinema. The ticket will cost far less than the bonus in question, and the employee will remember the genuine sentiment behind the reward.
• Grant a free day off.
Everyone loves a day off work – particularly if it was entirely unexpected and won’t count against the holiday allowance.
• Provide additional training.
On first glance, this might sound like an anti-reward, but offering to put a high-performing employee on a training course that will help further their career will be a reward that is highly appreciated by most people.
• Enable a job swap.
Employees who go above and beyond often display a desire to work in other areas of the business, and a great way to say “thank you” for their effort is to give them the chance to spend a day in the position they’re vying for.
• Provide time for side projects.
If someone is doing particularly well and you know they invest a significant amount of their spare time in a side project or hobby, give them the chance to spend some company time on it. Sound risky? Quite the opposite – it’ll demonstrate you’re unafraid to allow employees to indulge in other interests, and it may even result in new avenues for the business itself to explore.
Reward schemes should be addictive and sought out by every single employee, no matter their position within the company. If your business relies solely on an ageing bonus structure to incentivise its staff, we hope the above advice has tempted you to head back to the drawing board.
Have fun with your reward scheme and build something that recognises the importance of looking beyond the payslip.