Bonus is indeed every employee’s goal. Each new employee looks forward to the bonus they receive after regular task and hard work. The more the hurdles, the more they push their paddle.
Step by step they actively participate in company’s progress. Thus, entrepreneurs and businessmen should strive to make a Perfect Bonus Program or incentive programs which will motivate the employees to work better.
Employers who neglect in boosting their workforce have a higher possibility of losing talented employees as the economy progresses. A big mistake many companies make is to fall short in putting enough thought and creativity into the program.
Characteristics of a Perfect Incentive or Bonus Program:
1. Aim of Bonus Program:
Employee bonus program has multiple aims. One of which is to generate new business, creating a profit for both the employee and the business at a whole. Company’s revenue and profit solely are at the hands of the workforce and their dedication. Thus, it is a duty of the employer to keep his workforce motivated. But there are various different types of bonus programs such as Current Profit sharing, Gain Sharing, Spot Bonus Award, Non-cash Bonuses, Sign-On Bonus, Mission Bonus, Holiday Bonus, Sales Commission etc. Thus, along with the aims one should also choose the type of Bonus plan to be implemented. The decision should be based on the factors like company’s economic condition, Annual profit, practical goals etc.
2. Itemize the goals and target:
To create and then execute a successful bonus program or incentive plan, companies must first itemize and list down the targets, and then form a suitable program around those decided objectives. These objectives should again be in a step-by-step hierarchy.
3. Make a platform for new ideas:
Businesses develop and revolve around a single element ‘Ideas’. Ideas can either make or break a company and its progress. For a successful expansion of a business there must be a platform for new ‘ideas’. A platform not just motivates the employee to give his best but leads to a friendly environment to work in. Further rewarding these ideas can strengthen the dedication of the workforce.
4. Grant reward on profit:
Allowing new ideas is a risk indeed, but they certainly do make way for new products or achievement of a greater goal. On each profit if a company allots reward, then surely the workforce will help in scooping up the company’s economy.
Further rewarding on the basis of the overall performance of the company makes them feel worthy of themselves. This reward system will surely motivate them to improve their performance year by year.
5 . Create an unbiased program:
‘Jealousy is a root cause of all problems’. An unfair program can be a root cause of internal conflicts. This may turn into an obstacle for the company’s progress. Thus, an unbiased bonus program is ultimately one of the most important factors in a ‘Perfect Bonus Program’.
6. Step-by-step levels:
Video games are the best example of moving step-by-step. They vary from an easy and attainable target to a harder level. Similarly, simpler and viable targets must be placed in order to be achieved early. It not only boosts the confidence of the employ but propels him to excel and achieve further appointed targets.
7. Monthly rewards instead of annual:
Bonuses provided at the end of the year face two major restrictions. Firstly, the employee has to wait for a long time to receive a reward for good work. Secondly, the time difference between the reward and the work done makes it less effective, as the long gap may affect the motivation. Further rewards at a regular interval may impel the employee to acquire the set goal. It indirectly even encourages the newly employed workforce and the progress goes on.
8. Reward in unification:
It is not a myth that, rewards to some may lead to internal conflicts between the employees. The best way to strategize the bonus program is to give away rewards to each and every person that has made a difference, may it be on a smaller scale or larger one.
The star performer cannot perform without these supporting people. So be it a smaller reward but unified, it will boost the friendly relations as well as enhance the work atmosphere. And no one will feel left out on the `Appreciation Day`.
9. Rewards and payment to be paid separately:
Rewards and payment should not be paid together. These separately paid rewards will make them realize their achievements. After all, we celebrate when we realize we have extra and not when it is combined with something.
Rewards can not only be cash bonuses but also some valuable gifts or in the form of some memorable treat. Rewards and recognition main purpose is employee appreciation.
Various Appreciation Methods and Techniques:
1. Appreciating efforts publicly:
Appreciating the work, ideas, and achievement of your employees is one of the key factors in the success of the Bonus Program. Showing your appreciation makes them feel worthy and encourages them in striving for a good performance. Further rewarding them on the completion of each successful task is also important.
As we learned above that monthly payments or reward enhances their spirits to work better. When praised publicly. their self esteem and confidence heightens and they get devoted to their work too.
2. Appreciation phone calls:
Appreciation over phone calls by the employer directly is one of the ways to not only appreciate but also getting to know your employees personally. This friendly relation will keep your talented employees intact with you and your business enthusiastically.
3. Appreciation on overtime:
Not everyone gives their 100% to a work. But few dedicated employees work overtime on the call of duty. Deadlines mean a lot to them. That is your queue to appreciate their hard work. (You could give bonus in the form of mini-vacations or a few days off).
4. Appreciation Week:
Appreciating Week is one of the ways of rewarding weekly on the basis of weekly performance. May it be a weekly target achieved or the helping attitude, this appreciation will surely increase the competing spirit to get better. And of course it is for the betterment of the company.
5. Appreciation for good behavior and promoting friendly environment in the workplace:
Friendly environment plays a real time important role in workplace. Healthy relationship with employees is undoubtedly a key element of a `Healthy Workplace. Maintaining this relationship enhances the loyalty of the employees towards the company.
Look Out for your Company First:
1. Budget oriented program:
A Perfect Bonus program or incentive scheme is not only looking out for your employees but also making sure that it is profitable for the company’s annual economic growth. Thinking for a practical as well as budget oriented program is an equally important factor. Modify your bonus program according to the budget. There are several ways adopted by low-budget companies to appreciate their employees work.
2. Clarify the criteria:
Rewards should be placed upon a certain criteria. Clarify the criteria with detailing. Look for the important goals or targets and place rewards on them only. Think whether it’s the ideas, the behavior or the performance of the employee that you would like to reward or appreciate.
3. Strengthen the loyalty:
It is indeed a competitive world and everyone focuses on their betterment. In such a period of economic growth and more opportunities strive for strengthening the loyalty of your employ towards yourself. Try to reward each and every contributor.
Reward and Recognition Program Guidelines:
1. Not for just favorites:
Many a times it is seen that rewards are given to favorites only. This scheme may prove to be harmful in promoting healthy environment in workplace. It also creates disputes among the employees which further de-motivates the workforce and nullifies the program.
2. Do not start with mega gifts:
When it comes to gifting, do not start with mega offers. Mega offers can lead to rivalry and cut-to-cut competition within the employees. Starting with small will not only save your profit but also keeps driving them towards more goals.
3. Appoint a secret observer:
A secret observer will be the one who will note down all the progress and work done by the employees. Make sure that the appointed person is just and not partial. Appoint a fair and honest employee and time and again keep a check on the work of the person appointed as well.
4. Refrain from rewarding the same employee all the time:
If your bonus system is based on nominated basis then there are wide chances of repetition in nominees. There are chances that nominees are selected on the basis of popularity and thus not everyone is rewarded. It might result in laid back behavior of the other hard working employees. Certainly not a good choice!
Gary Brose, a well known entrepreneur and owner of multiple industries has described the effective bonus programs in eight different ways:
Effective Bonus Programs: 8 Ways
Employers should create numerous levels so that the workers can continuously work upon the new goals after the accomplishment of the previous other goals.
Employers should also make programs that are fair and unbiased for all the employees. This technique helps in getting rid off all the possible controversies between the departments and its employees. Thus, a just and impartial bonus program for the entire workforce is necessary.
3. Scheduled bonuses:
Employers should vary the bonus schedule depending upon the post of the employees, starting from the newly employed to the senior executive in an ascending order. Lower level employees should receive bonuses in monthly paycheck, mid-level managers to be paid in a quarterly basis whereas the senior executives should be paid annually. [Here again rewards and payments should be paid separately].
4. Simplified communication:
Communication at times can prove to be a very important factor. Programs should be explained in a simpler manner. Employers should make sure that the program is understood by the entire workforce and\or the department.
5. Relevant targets:
Targets should be set according to the employees’ abilities. The amount to be given as a bonus should be fairly adequate to motivate them. [Even if it is not a cash amount then make sure that it is motivational].
Measurable result is one of the main motives behind a bonus program. Thus, the focus should be on the results and not on subjective opinions.
Progress made towards achieving a goal should be shared at short intervals in order to motivate them to do better. Further it shows them where exactly they stand on their way towards the target.
Levels and targets should be fixed in a way that they are easily attainable, in an ascending order. Levels should start with easy targets and so on. Further, it should be within the reach of the employee. Do not set a goal which the employee is unable to chase. It is essential to keep in mind the ability and mindset of your employee. (Targets should neither be easy nor too difficult, just appropriate enough to start.)
Appreciation, appraisal, bonus reward and incentives for employees all go hand in hand in enhancing and strengthening the talented workforce. Implementing a Perfect Bonus Program or employee incentive is just the way to reward, recognize and encourage the employees who work hard and contribute to the overall success of the business. It on a longer run, boosts the company’s profit margin. It is a perfect way to build a company’s reputation as well as enhancing employee’s loyalty. Studies clarify that employees who receive bonus in any form are more dedicated and devoted towards their work compared to those who are not. Motivation in the form of money is appreciated but if that motivation is given in some other form, on a personal basis it will intensify their faithfulness in the company as well as deepen their adoration toward the goals.