While there are certainly many categories of bonuses, there are four main types that likely make sense for your Middle Market organization.
When To Implement Each
Explore when each type of bonus will garner the best results.
Referral bonuses – Referral bonuses work best when there are clearly defined processes and expectations in place and a driving motivator. Implement referral bonuses when you’re struggling to find candidates, have urgent needs or many openings.
Sign-On bonuses – Sign-On bonuses make sense when you have urgent needs or have been struggling to fill a position. Use Sign-On bonuses when you seek candidates with specific knowledge or education. Or, if the position pays less or your benefits aren’t as robust as you like. Also, if you require relocation or something about the position isn’t appealing enough to your target audience. Utilize sign-on bonuses to help candidates decide in your favor.
Spot bonuses – Implement spot bonuses to reward successes in a timely fashion. Decide if it will be when employees or teams achieve phenomenal results or cut time or costs. Spark innovation or competition and drive success and growth with strategic spot bonus usage.
Retention bonuses – Retention bonuses work best to guide employees to become invested in your Middle Market firm’s long-term success. Quarterly and yearly bonuses are the most well know retention bonuses. But, there are certainly others. Explore stock options and profit-sharing for your organization to aid in retention.
How To Get The Most From Each Type of Bonus
Your main goal will be to get employees excited about them and to make sure they are effective. Re-evaluate often to make ensure the ROI you desire. Change your processes, expectations, and implementation of bonuses if not.
Referral – Educate employees on how your referral bonuses are structured, when they are paid out, and what a successful referral entails.
Share when you need to hire urgently. Don’t assume your employees know when you are looking. Give out a lot of information about who you are looking for, what their qualifications will be and how to spot a successful candidate.
Sign-On – Sign-on bonuses usually need to be significant in size to attract the right candidates and disclosure and discretion are key.
Document exactly what is needed for sign-on bonus eligibility. Specify how they will be paid out.
Spot – Solid documentation and transparency are vital. Utilize visible spot bonuses to drive excitement. Present spot bonuses unexpectedly.
Add bonuses into your budget. Share with leadership exactly what you’d like to reward – innovation, cost-savings, increased revenue, education, social & charitable initiatives, etc.
Retention – Think about yearly rather than quarterly bonuses, and make longer-term bonuses increasingly significant.
Tie the bonuses into retirement plans, profit-sharing or stock options. Scale PTO or benefits payouts after increasing years of service or consider offering sabbaticals or vacations.
Satisfy internal needs and drive employee satisfaction for maximum payoff. Using these four types of bonuses strategically will do just that.
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