Reducing or stopping an expected bonus can push employees toward the exit door
In a world where labour shortages are a top concern and job hopping has become acceptable, employers need to leverage all the tools at their disposal to retain their workforce.
Bonuses are one such tool that, used creatively, can help attract new staff, reward existing team members, and retain top talent by showing the organization appreciates its employees. Used unwisely or unexpectedly reduced or stopped, it can create a final push for someone already considering quitting.
Most Canadian employers seem to understand this, as 92 percent say they plan to award a year-end bonus to their teams this year, says a report from Robert Half. Forty-five percent of employers plan to give a larger bonus than last year, 39 percent plan to give about the same, and roughly eight percent plan to give less than last year.
It can be a bit of a challenge, says Mike Shekhtman, senior regional director at Robert Half. “Employers need to make sure the bonus is not pulled out because the last thing they want to do is have people disgruntled and then move on to a new opportunity. However, knowing they might receive 10 percent of their salary in a bonus at the end of the year may make employees think twice about leaving.”
Great way to recognize team members
Shekhtman says bonuses can be a powerful tool and “many smart employers are recognizing that it’s a great way to recognize team members. 2023 has been a challenging year for many professionals and their families, so if the employer has the budget to give the bonus to recognize somebody, it can go a long way in terms of driving engagement.”
He cautions, however, that the bonus should not be the only retaining strategy, but that it should be part of an overall compensation strategy that includes other perks and benefits. For employers that don’t have the bottom line to support a bonus, they can offer other methods of appreciation and recognition such as workplace flexibility or hybrid work environments. Offering a day or half-day off might be just as valuable, he says. “This may not impact the business so much, but it can mean a lot to the individual.”
Recognition also means different things for different people. While most people won’t balk at receiving $1,000 from their employer, it might mean more to some if their manager writes them a card and genuinely says “thank you” for their hard work and effort.
Whether an employer chooses to offer a bonus or a thank you card, it’s important how the company communicates what it means.
“This is a part that is sometimes missed for some employers. They can have the best intention but if it's not communicated effectively, if they’re not transparent and timely or if they’re not personalizing it, the purpose of it can fall short.
Bonuses are an excellent employee incentive program to recognize and reward employees for their hard work and achievements. They offer immediate, tangible recognition that reinforces positive behavior and performance. Financial rewards like bonuses not only increase motivation but also foster loyalty, as employees feel their contributions are valued and acknowledged by the organization.
Opportunity to build relationships
“Employers should be thoughtful in terms of how the team gets the message. This provides an opportunity to communicate with staff and build that relationship. And, now with new legislation coming into effect in British Columbia and possibly Ontario around pay transparency, you don’t want to have any sort of false biases in terms of how bonuses are paid off and you can't be too subjective in nature. It's important to have a level of consistency and equity and you have to be able to explain the why behind it.”
Shekhtman believes bonuses will continue to be a great tool for organizations and will be an important part of an overall compensation structure as employers vie for limited talent that may be available as the older cohort leaves the workforce for retirement.
