9 Types of Employee Bonuses that Workers Love
With today’s unprecedented labor shortage, small business owners are doing all they can to recruit, hire, and retain quality workers. They’re even becoming more creative in ways to engage workers. An employee bonus is an employment perk that motivates and rewards workers and inspires loyalty. Bonuses come in two general categories: performance-based bonuses, to acknowledge employees for specific achievements, and non-performance bonuses, for general appreciation and goodwill. Here are nine of the most common types of employee bonuses.
Types of Common Employee Bonuses
An end-of-year bonus shows appreciation for an employee’s hard work from the previous year. Businesses that finish the year in a strong financial position may choose to give bonuses to all employees.
Holiday bonuses come in all forms, depending on the company’s tradition. They may be gifts, cash, or a pay-out of one month’s salary.
Referral bonuses encourage employees to invite friends, family, and acquaintances to work for their company. With a referral bonus, the organization adds to its applicant pool and saves money on recruiters.
Sign-on bonuses help attract new talent to the organization by establishing goodwill and offering compensation the employee may be missing from a current employer because they join a new company.
Profit sharing encourages workers to understand that their performance affects the company’s profitability. A typical profit-sharing bonus is 2.5 to 7.5% of payroll, depending on company profits.
Gain sharing, commonly found in manufacturing facilities, encourages workers to take responsibility for production quality and quantity. Employees receive bonuses for statistical improvements in a set period, for example, monthly or quarterly.
Retention bonuses encourage employees to remain with the company for a specified time. Typically, these bonuses provide continuity in times of a merger, acquisition, or important project.
Spot Bonus Award
Spot bonus awards reward employees for going above and beyond in their line of work. Spot bonus awards, typically $50 or more, can be given at any time.
Not every bonus includes a monetary award. Staff recognition, like an Employee of the Month award, instills pride in the workplace and contributes to employee morale. The recipient may receive a gift, gift card, designated parking space, or another type of noncash award.
Bonuses Contribute to Success
Small business owners understand that people are the No. 1 factor that differentiates their organization from their competition. Bonuses are a way to reward people and celebrate performance milestones. Bonuses promote positive behaviors at the individual, team, and organizational levels, contributing to overall business success.
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About the Author: Once a mild-mannered reporter and editor, Joan Koehne took on the persona of her alter ego, Wonder Writer, to launch Writer to the Rescue , the content writing division of Packerland Websites. Wonder Writer is “saving the world one word at a time” with power-packed content marketing for digital and traditional media outlets.