Reward based compensation is just a fancy name for a bonus. Bonuses are good, we all love bonuses. That is, we all love getting a bonus.
As entrepreneurs and managers working with tight budgets and increasing payroll costs, adding to those expenses with employee bonuses may seem like not a great idea. In that case, don’t think of it as an expense – consider it an investment.
We’ve talked a lot about the cost of replacing good workers and the benefits to keeping them for a long time. I’m telling you, as a staffing expert, it’s never been harder to attract quality staff for reasonable salaries.
That’s why the idea of employee retention is top of mind for all the business experts and consultants. They’ll charge you big bucks for what I’m going to tell you right here in this email.
Giving bonuses as a reward for excellent work will keep your employees coming back for more. This is so important for workers who can’t move up in your organization, who may feel like they have no room for growth.
As usual, I learned this one the hard way. Many years ago, before I knew about the power of reward based compensation, I lost a great employee.
She’d been with me for five years, everything seemed fine, the business was humming along and then one day she came in and gave me her two week notice.
I shouldn’t have been surprised, but this was also before I knew about the value of the weekly check-in.
What got to me, though, was that she left for basically the same job with a similar salary at a different company. There was only one difference. . .
You guessed it – bonuses.
She knew, as an office manager, there were no advancement opportunities in either business, but my competitor gave her a performance based bonus incentive plan and that sealed the deal.
At HireSmart Virtual Employees, we want you to have every advantage when it comes to keeping your workers happy and productive for the long term. That’s why we advise you to use bonuses to spice up your compensation package and keep your staff motivated.
Here are some tips when you’re thinking about creating a bonus program.
- Use the bonus program to show recognition and appreciation for behaviors you want to promote. What you bonus is what will get done
- Not all bonuses are monetary. In our business, we do compensation, time off, close the office for an outing together, think bigger than just cash. Not all workers are motivated just by money.
- Use bonuses strategically so they’re not the only source of employee motivation
- If you give the same reward repeatedly, it can lose its reinforcement value. Try changing the type of reward you give your employees periodically.
- Budget your bonus payments at one to two percent of annual payroll
Increasing payroll one or two percent is a big deal. But the bang for your buck on that investment in your staff will save you big time by keeping employees long term.
At HireSmart Virtual Employees we know that sometimes you have to spend a little to save a lot. In fact, we save our customers an average of $26, 770 per year on labor cost for each employee.
We recommend you put some of that savings into an employee bonus program and the rest in your bank account.
Are you looking for ways to build a strong team that sticks around a long time while saving you a lot on payroll? Then you’ll be happy to know that’s our specialty. You can book a free consultation here for creative staffing solutions.