Bonuses are given by companies to increase productivity and reward workers. Yet not all companies choose to give them out. We discuss the use of bonuses and if they work in the text below.
How often are you given a bonus at work? From large holiday bonuses to small rewards, getting one can be a nice little pat on the back. But just how effective are they, and do they make you and others around you actually work harder? Below, we dive into bonuses from employer and employee perspectives.
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What Does Everyone Think of Bonuses?
A recent study has revealed that around 42% of employees expect to get a holiday bonus. The research by Agital looked at 1500 employees and found that around 32% would also consider moving to a different company if bonuses were not awarded. However, a sizable 60% of employers also said that they plan to give out bonuses to staff.
The reasons for handing out bonuses are plentiful. Around 82% of employers believe they improve staff morale and workplace culture. Just a smaller amount also said they help to increase staff retention. Any that did not give bonuses said this was down to budgets and company policies.
However, when it comes to cash rewards and incentives, not all staff members are motivated. Paid time off is one route, with three in four workers actually preferring this. Others would be satisfied with other gifts that increase their well-being, like gym memberships. Even company stock and a reduction to a four-day workweek are ideas suggested.
The big question remains as to whether bonuses actually work. In a world of worsening pay inequality, could bonuses actually cause more harm than good?
Why Bonuses Work
There are plenty of reasons why providing bonuses works. They do not just apply to employees either, but also to customers and clients. In fact, whole industries have emerged and grown popular, built on the back of attractive bonuses.
One of these is the online casino industry. As well as several factors like increasing the quality of games, security, and customer service, bonuses have played a major part in the iGaming sector. They have incentivized people to sign up for services and give them a way to play without making any major financial commitments. This sister casinos post by Bonusfinder provides a huge list of the most popular online operators ranked by their offers, including free spins and matched deposits.
When you give bonuses to your staff, the general reasons are the same. The first is that it provides motivation. It sounds like a simple concept, but if you pay people, they will generally work harder. If you really want to make the most of this, you could consider adding performance target criteria to your bonuses. In this way, the bonus is given if the staff member reaches a predetermined objective.
Bonuses can also save you money. With bonuses, staff will be more inclined to stay at the firm and not look elsewhere for better pay or opportunities. If they contribute to staff staying at the company, you can save a whole lot on recruitment costs. Recruiting is also time-sapping, so you benefit in this way.
You can even use bonuses to create a sense of team within your organization. If you opt for a team bonus, then every member has to play their part. With this route, you have chosen a common goal that will unite the staff.
The Downsides to Staff Bonuses
Bonuses are by no means a golden ticket to increased productivity. They have to be done correctly and in the right manner. In fact, in some instances, they may backfire horribly.
Once bonuses happen, there may be a propensity to expect them every year. In this case, it can worsen productivity and motivation. It simply becomes an expected part of the pay packet. If these bonuses do not arrive, then staff can feel hurt and demotivated. This can lead to a drop in productivity and could even make some people leave the company.
It is also worth noting that bonuses are taxed. This can seriously diminish the value a bonus has depending on the rate and band. In these instances, it may be better to provide actual gifts or incentives as a bonus. Even gift cards can go some way to alleviating this.
Finally, bonuses do not always have the desired outcome. Some studies in which bonuses were used to reduce absences, in both cash and days-off style bonuses, reduced nothing. In this case, employers felt less guilty about coming to work. It showed that turning in every day was not a normal prerequisite and that it was rewarded as something exceptional. Thus, they chose to just be normal.
To decide if bonuses are right for your company, discuss it with staff. Ask what would incentivize them. They may surprise you and give better ideas than a simple cash reward. By including them, you also get them to take an active part in the future of the company.
