|Susan Solovic, The Small Business Expert is an award-winning entrepreneur, an attorney, a New York Times best-selling author, a media personality and a highly sought after keynote speaker.|
Pay Hikes, Bonuses or Added Perks: Which are Best for Your Business?
A colleague used to work for a major corporation where the two founders, who started the company in their garage, were still at the helm. In the early days they gave all their employees Thanksgiving turkeys. They continued the tradition even when they employed several thousand people.
It was seen as a pleasant perk and also a connection to the roots of the company. Another business "tradition" is the Christmas bonus or in the more secular parlance, the year-end bonus. No matter what you call it, the day they're handed out is certainly a popular event at many businesses. Whether or not you awarded year-end bonuses last year, take a little time now to consider the bigger compensation picture at your company so you can make the best financial and motivational decisions throughout the year.
Don't Limit Your Choices
Think about merit increases, cost of living increases, bonuses, added time off and other perks, such as health club memberships, when you decide how to reward and motivate your employees and do what is best for your business.
The trend has certainly been toward bonuses in place of across-the-board pay increases. They allow employers to react better to the natural ups and downs in business. This has become especially important in recent years because the business and economic climates have been, at best, "unsettled."
There are indications some employees prefer an annual raise to a bonus, but if you decide to go that route, you're missing out on some significant advantages that are offered by the bonus.
Benefits of Bonuses
First, it is easier to make your best employees truly feel rewarded at bonus time. When yearly pay increases are in the 1-3 percent range, frankly they all feel small, even if you're attempting to "reward" your best folks with 3 percent compared to an average pay raise of 1.5 percent. A hefty bonus check at the end of the year can make your best employees feel appreciated. On the other hand, when you have a rough year, everyone senses that, and loyal employees are apt to "understand" when bonuses are small or take a year's hiatus.
Increasing paid time off is another way to reward employees. In businesses with a fair number of employees, a few more vacation days dispersed among the departments doesn't result in a major out-of-pocket expense. And while what I'm about to say sounds cynical, believe me it's not, it's just a fact: Many employees don't use their vacation days anyway. It's a good idea, by the way, to put a cap on how many vacation days an employee can accrue. Also, encourage your team members to take the time off they have coming to them.
Poll Your Employees
Finally, talk to your workforce about what they'd like to see: a general increase, bigger bonuses, more time off, or other benefits. Getting involved in a wellness program, perhaps including a gym membership or an occasional visit by a professional trainer might help you with your health insurance rates.
And, as you review what your employees prefer, see all of the possibilities not just in the context of how well your business performed financially last year, but also in light of which strategy will best motivate your workers and help you grow in the upcoming year.
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