Discover the best way to design an employee bonus scheme to reward and benefit your team for hard work. Keep reading to learn more.
One of the top things employees are encouraged to think about when accepting a job is the benefits.
You may already offer an attractive employee benefits package that has things like flexible working hours and the like. But you might be thinking about what else you can do to not only attract new employees but retain your old ones.
A great benefit to offer is an employee bonus scheme. If done well, not only will this encourage people to work harder, but to also remain loyal to your company.
If you’re wondering how to design an employee bonus scheme, then read on. We’ll explain how to put together one that will reward your workers for their hard work accordingly.
Involve the Right Stakeholders for Your Employee Bonus Scheme
For an employee bonus scheme to work well, you need to first determine the right stakeholders in this project. For most companies, this will be not just management, but also your HR and finance team or virtual CFO. All 3 will closely work together to flesh out the details of this employee bonus scheme.
Obviously, the finance people will determine how much of your budget is available for employee rewards. The management team will determine what your business goals are. And HR will do the research on what your industry pays its employees in terms of bonuses (in relation to market value of skills) so you can offer an attractive package.
Considering there’s a fine line to walk between all 3 factors, it’s essential that you test and tweak your bonus scheme. Not to mention, there should also be a clear line of communication and transparency between all 3 teams. This will ensure the employee bonus scheme is a success.
With most organisations, the bonus scheme won’t involve one singular bonus that every employee is eligible for.
In addition, you have to consider the fact that some may strive to do their best but fall just short of the requirements to earn a bonus. In that case, should you award a partial one, or make it an “all or nothing” scenario?
On the other hand, what will happen if employees go above and beyond? Will you reward them for overachieving, or will the bonus amount stay the same?
You want to come up with a scheme that’s challenging, yet not so much so that it seems impossible to reach. But also one that doesn’t reward the ‘wrong’ behaviour. In the end, you want to make sure your bonus scheme motivates your employees to work harder, not make them feel disheartened.
Other points to address include:
- Clear objectives the employees should meet
- How much each part of the program is weighed up against one another
- What bonuses are for which employees (if not for all, then who?)
- If there will be one, what the maximum payout is
- What the requirements are for a partial bonus
- What bonuses are available for overachieving and any limits
Once you’ve determined all of the above points, you will also need to go over a funding plan with the finance department or virtual CFO if you don’t have an internal finance department. Small businesses (especially startups) usually have a limited budget to work with, so you want to be confident that you can properly reward your workers without going into the red, all before putting the bonus scheme into place.
Put Your Plan Into Action
At this point, you should have a good idea of how you’re going to fund your employee bonus scheme. As well as how the bonus will be paid out and when. The next step is to put your plan into action.
When you do this, make it clear to your employees who’s eligible, what they’re expected to achieve, and how their performance will be assessed. For the people responsible for assessment, they need to have a rubric that is fairly applied to every employee. This is to ensure there are no surprises or discrimination/favoritism.
The last step in designing your employee bonus scheme is determining the payment schedule. For most employers, they tend to have an annual or bi-annual scheme. It may be best to try an annual plan out and adjusting accordingly in the future.
On that note, to keep your employees as satisfied as possible, you need to keep customising your bonus scheme. Don’t implement it and then keep it static, especially if you’re receiving lots of feedback about it.
Remember, this bonus scheme is intended to be motivation for your workers, so if they voice their frustrations with a certain aspect of it, always listen to them. By constantly adjusting for reasonable complaints, you’ll get better employee performance and morale.
Design an Attractive Employee Bonus Scheme With Our Tips
Now you have some great advice on how to design an employee bonus scheme that’s attractive to both new and old workers.
But it’s not easy to design one on your own. There are many nuances when it comes to your company’s finances, which may require some outside help. In this case, having the assistance of a virtual CFO would help immensely.
By fully understanding your finances, this gives you the power to grow your company for tremendous success. With a virtual CFO, you can benefit from the expertise of one without the huge costs associated with hiring one for your business. For this reason, it can be well worth investing some money in this service to see your business take off.
Do you need help with other financial aspects of our business? Then speak to us today to hear more about hiring a virtual CFO. We offer a flat monthly fee so you have no surprises in your budget.