For people like Clark W. Griswold, year-end bonuses help people get by or do something nice for their family, and when these bonus checks don’t come (or a flimsy gift like a free jelly of the month subscription takes its place), employees are left feeling frustrated and undervalued which can poison the upcoming work year.
Modern employees need to feel valued, appreciated, and fairly compensated for their hard work, and when a company fails to meet these needs, employers run the risk of losing their highest performers to better opportunities with other companies who strive to meet this criterion.
Year-end bonuses are beneficial to business success and growth just as much as they are to employees. Here are some reasons why year-end bonuses increase employee retention and how to determine the best bonus style for your company.
Employee Experience and Retention
Employee Experience (EX) is the new HR, according to LinkedIn’s 2020 Global Talent Trends report, and EX is “everything an employee observes, feels, and interacts with as part of their company.”
Of the companies that value Employee Experience, 77% invest to increase employee retention, and 71% invest to increase employee productivity.
These company investments don’t go without reward. Companies that were rated highly on the EX factor of compensation and benefits saw 56% lower attrition, therefore meeting their goals of retention.
Year-end bonuses are part of Employee Experience because employee morale increases when an employer takes the time to show appreciation for their staff. While many business owners may see year-end bonuses as merely altruistic, they are actually a strong employee retention strategy that also encourages employee engagement and a culture of commitment.
When staff members are recognized for their efforts and performance, their level of confidence in their role increases. With this confidence, productivity is shown to expand, then business objectives and goals are met at a faster rate. At the same time, employee turnover rates decrease while retention rates swell with a work environment of satisfied employees.
The Stakes are Rising
As more companies put a focus on EX and investing in their talent, the stakes rise for employers to match up. If your company culture, compensation, and benefits packages aren’t up to date, then you risk losing your most desirable employees to companies who will give them the Employee Experience they deserve.
Especially in recent times of the Covid-19 pandemic, workers are re-evaluating their options as remote positions and flexible work schedules are more consistently offered. In addition, some companies like Amazon offered $500 bonuses for full-time frontline workers and $250 for part-time workers last June, and another bonus at the end of the year.
Many other companies are offering a signing bonus to entice new workers and attract top talent as the struggle to find staff intensifies and turnover rates snowball.
Now more than ever, it is important to turn to your most valuable employees and thank them for their work during the pandemic and onward with a year-end bonus that encourages retention.
The Right Bonus Plan for Your Company
Every company’s year-end bonus program looks different. The types of bonuses that you offer are subject to your business’ finances and values. When drafting a bonus plan, start with your company’s finances and allocate how much room you have to invest.
Next, you can contemplate your company’s values and what type of bonus will align with your ideology or mission that fits within your budget. Many employers offer bonus checks as a one-time payment, but others give gift cards, paid time off, and other gifts.
You don’t need to spend excessive amounts of money to have the same effect but striving beyond a mere three-dollar Christmas tree ornament goes a long way.
Finally, you should fairly structure your bonus plan. Some companies offer flat rate bonus checks for every employee, some vary in amount depending on if the worker is full-time or part-time or are based on position hierarchy. Others use performance-based bonuses by implementing incentive plans.
How you decide to devise a structure for your year-end bonus plan is up to you, but always remember to have it carefully thought-out so it is easily understandable to your staff. The key is to have a fair program that leaves employees happy and appreciated.
Your Business’ Bonus Program Options
- Cash or Check Payments: Monetary employee bonuses are usually the most common form of year-end bonuses and are highly favored by staff. These one-time payments can be structured in various ways:
- Flat Rates for all employees.
- Higher rates for full-time employees and half the rate for part-time employees.
- Payment amounts are derived from a percentage of the worker’s salary (ex: extra 3% of salary).
- Employee retention bonuses (longevity-based rates derived from a worker’s period of time with the company).
- The amount is derived from the position hierarchy.
- Incentive-based amounts that reward high performers who reached certain goals or quotas or exceeded expectations.
- Gift Cards: Restaurant gift cards or company gift cards are popular employee bonuses that also fit in with the holiday time spirit. The amounts are generally smaller and can be structured similarly to cash or check payments.
- Paid Time Off: Rewarding your staff with extra PTO days is effective in showing them your appreciation because bonus time off work to spend with family or friends or take a vacation is always sought after. Most companies give paid holidays but some extra time off of a worker’s choosing can decrease employee burnout and give them time to relax.
- Gifts: Some common bonus gifts include fruit baskets, subscriptions, ornaments, flowers, books, office supplies, or company products. Giving a small gift is better than doing nothing at all, however, with these small gifts, it is crucial to think them through. You don’t want your employees to feel like their year of effort is equivalent to a mere useless subscription or cheap ornament so try to be as intentional as possible.
No matter what kind of year-end bonus your company chooses, add a thoughtful card or thank you message. If you have the time to make it more personal for each employee or handwrite the notes, even better! Though this can be too great of a task for a large company, any message effort made is important. If your business is smaller and struggling financially after Covid-19, a considerate and personal thank you card is a great option.
These year-end bonuses will impress your staff with your thoughtfulness, and make them feel valued and recognized in their role in your company. You can never go wrong when your employees feel appreciated and satisfied! As an employer, your rewards of magnified employee productivity and retention rates will soon follow!
If you’re looking for top staff that will perform well and stick around, we can help! Check out our Recruitment Services or Contact Us today with any questions or inquiries about your company’s staffing needs.