December is just a few days away which means that this is the time you are doing your strategic planning in preparation for the new year.
But even as you plan for the next year there is one thing you need to put into consideration; year-end bonuses.
In a survey conducted by Corporate Staffing Services in 2015, a majority of employees expect bonuses every end of the year.
From the survey, most employers tend to use non-monetary gifts like shopping vouchers, lunches and outings, extended leave days, recognition through various awards or even gifts to reward their employees.
“When rewards for performance are not based on money, the culture of a company tends to value recognition instead of the drive for money. Simultaneously, companies that use non-monetary reward systems spend less money motivating their employees and more money on improving other areas of business,” said Perminus Wainaina, Managing Partner; Corporate Staffing Services during the launch of the “End Of Year Employee Rewards Survey.”
Often times, bonus payment is based on company and individual performance in that year.
The company may perform very well and as such a percentage of the profit is shared with employees in terms of bonuses. But how do you determine the metric for giving such bonuses because not all employees perform the same; performance bonus!
Some companies pay performance bonuses to individuals or departments that meet their KPIs for that year which is may be a percentage of their salary.
However, since this kind of bonus is based purely on performance appraisals, not all employees are guaranteed to receive.
It is only given to employees who have exceeded expectations and met set KPIs after a performance review. But how do you determine who to give what and the percentage?
Contrary to popular belief, performance bonuses don’t have to be monetary. There is a certain level of your employees that would appreciate the monetary benefits and those who would rather have it in non-monetary forms.
For instance, highest possibility is that your most senior managers would not appreciate money more than they could appreciate a holiday package and maybe you can reserve the money for entry levels and maybe mid-level employees to a large extent.
The other thing to note is that; you can also give performance bonus to an entire department instead of individually. For instance, your sales team that met the sales figures that were set or if that particular team did something that you consider exceptional.
Performance bonuses are meant to motivate and enhance performance in that an employee will be inclined to go above and beyond their call of duty to meet their set targets knowing that there will be something at the end of the year for that effort.
You can also use it to make the position more attractive when hiring to attract the right number of applicants if you are struggling with recruitment.
How then do you deal with non-performers?
In an organization set up, word is bound to go around especially if it has something to do with benefits and rewards. Some may wonder why they are not receiving a bonus while the rest are or why theirs is just a Ksh 2500 shopping voucher and another received twice their salary in bonus.
Hence the issue of non-performers comes in. In the company you have your star employees; those you can count on to get the job done and even go above their job description. And then you have the non-performers who always have to be followed around and do not meet the KPIs set.
Do they deserve a bonus or not? Obviously if your bonus is tied to performance, this particular group will be left out.
But to avoid conflicts that may arise with the year-end bonus awarding, you need to take it upon you and your managers to communicate this early enough. Explain in detail probably during the performance review why they will not be receiving a bonus this year and what they can do to change the situation next year.
This way you will cultivate a culture of responsibility and performance in the company and all employees will work to ensure that they are not left out in the bonus payout come next year.
In the end, bonuses are important but they still remain at the discretion of the employer whether to award or not. If you are to award, consider tying it to performance and taking the necessary steps to deal with non-performers.