Staff bonuses: employee incentive or ineffective cost?

Staff bonuses have long been a way for employers to motivate and incentivise their staff to go the extra mile and achieve pre-agreed targets that help towards the success of the business.

But are they still an effective tool or a costly drain on the annual budget?

Some employers have found that staff bonuses can be exploited and taken for granted by employees, which in turn leads to less productivity and a complacent workforce. The worse offender for this is the type of company bonus scheme where all employees receive a cut or bonus coming from the annual profits of the organisation.

Many employers (and some employees) have noted that whilst the majority of staff buy into this type of bonus scheme, some employees don’t put in the extra effort and leave the rest of the staff to pick up the slack to achieve these targets. This can lead to resentment amongst colleagues and demotivation.

However, individual targets with individual bonuses are still popular amongst employers who reward hard work on a one to one basis, however these type of staff bonuses can be time consuming to put in place and manage.

But before you make the decision to ditch staff bonuses, you’ll need to take a long, hard look at not only the contractual element of your employee’s contracts of employment, but you’ll also need to try and predict if there will be an employee backlash that could lead to some of your top performing employees upping sticks and moving to pastures new.

Remember, that staff bonus scheme might have been one of the main reasons that candidates decided to join your business in the first place, and for those employees that consistently meet the criteria set for achieving the bonus it will amount to a loss of earnings.

For those star employees, it’s well worth coupling the removal of the staff bonus structure with renegotiations on salary so that you don’t suddenly find yourself with several empty desks and a handful of mediocre workers.

For expert advice on staff retention techniques, talk to our team of experienced recruitment consultants today who can offer you practical help and advice to retain your best candidates.