11/23/2022
This is the third installment in this week’s series on valuing employees. Yesterday I talked about a few free options to let employees know they are appreciated. Today I’ll discuss the “Show me the money” approach. This takes the form of bonuses and raises. This approach is effective when paired with a behavior you want to encourage to continue and is separate from any cost of living (COLA) wage increases. COLA increases, which are also an important employee retention tool, will be covered in a separate series.
Bonus and merit pay raises can be based on attendance, number of calls answered, number of projects completed, or whatever other key performance indicators (KPIs) your business uses. Important to note, all bonuses are taxable. Don’t fall into the trap of handing out gift cards to employees. You’re setting your business and the employees up for unpaid payroll taxes as gift cards are taxable to both the employer and employee just as if you paid them a bonus in their paycheck.
An example of the “show me the money” approach in practice would be of waitstaff who are given bonuses based on the number of meals they run to tables. Rewarding number of meals brought to tables encourages timely food delivery and team meal delivery, both of which improve the customer experience (which ultimately increases restaurant revenue).
A similar approach could be used for care staff in a senior living facility where care staff bonuses could be based upon the number of call lights they answer or the average response time of call lights answered. Rewarding number of call lights answered and timeliness of answering increases resident satisfaction (which ultimately increases senior living facility revenue).
You can certainly give bonuses “just because”, but they will hold more meaning for both your employees and the company’s bottom line if you state how the bonus employees are receiving is a thank you for the good work they did meeting the KPI’s selected.
Not every company is in a financial position to take this approach, but most are. If your company is one that is in a position to reward your employees financially for their contributions to the company it will go a long way toward retaining those employees, and, when done properly, will also lead to increases in revenue.
Stay tuned for tomorrow’s installment when I’ll discuss another way business owners can say “thank you” to employees.