Jerry Maguire famously asked people to show him the money. Business owners may think that’s the mantra of their employees and new recruits, too. Yet, even in this tight labor market, there are plenty of good employee bonus alternatives to consider as well.
Different types of employee bonuses have various goals. Typically, performance bonuses are thought to motivate productivity and encourage quality work. Hiring bonuses, on the other hand, are meant to appeal to potential candidates and sway them to join your business over another.
Yet there are some possible drawbacks to both these types of bonuses. When it comes to the new hire bonus, you could be enticing a less excited employee to work with you based on the money alone. Well, once that bonus is spent, they realize they really wanted to work for that other company after all.
Performance bonuses also have issues. Employee bonuses can set unrealistic expectations for employees and encourage competition between them, which undermines valuable business collaboration. For the employee, too, there can be a disadvantage in the bonus compensation. According to the IRS, bonus pay can be subject to 25-35 percent tax withholding. “When you add in Social Security tax, Medicare and state taxes, withholding on bonuses can exceed 40 percent.”
Especially while the economy continues to recover from the global pandemic, employee bonuses are getting fresh attention. Who doesn’t want the happy employees, increased morale, and improved company reputation that comes from generously rewarding employees? Yet, not every organization has the cash flow to make bonuses possible. Fortunately, there are many employee bonus alternatives to consider.
Encourage work-life balance
Globalization and digital technology have increased the need for employees to be always on. The pandemic only exacerbated the problem. A September 2021 Harris Poll with the American Psychological Association (APA) found that:
- More than half (56 percent) of the nearly 115,000 respondents reported their stress was higher than before the pandemic
- 35 percent were more depressed since the start of the pandemic
- 31 percent said their stress about their own mental health is increasing
Instead of providing an employee bonus, you can work to address your employees’ emotional and mental health with attention to work-life balance. For example, there are many ways to give your employees the gift of time:
- Suggest employees leave the office for lunch or go home early
- Give them an extra paid day off
- Make a day off mandatory for everyone
- Reduce hours during the holiday season
- Allow staff to work flexible hours
- Let them roll over unused vacation days into the next year
- Pay employees to take time off to do something that helps them recharge
Simplify employees’ lives
This sounds at first like it’s more of the work-life balance discussion, but there are many small ways a business can simplify employees’ lives. You might consider:
- Catering breakfast or lunch for the staff on a weekly or monthly basis as a way to show appreciation and save employees from having to figure out their own food for that day
- Putting delivery lockers in your work environment to enable employees to get food, groceries, laundry, or packages delivered onsite
- Setting money aside every month to offer employees a fun offsite activity; GoDaddy, for example, offers its team members access to cooking and trapeze classes and whitewater rafting
- Sending employees office chairs or standing desks for their home offices if you continue to work remotely
- Organizing a virtual day of giving matching the employees’ donations to local nonprofits
Also take a look at these 15 Small Routines to Make a Difference in Employee Well-being (and Fight Burnout).
Invest in employees
Instead of signing bonus checks, you might foot the bill for tuition or continued learning programs for your employees. This is a tangible reward that can continue to pay off for your people throughout their careers. Plus, you get the benefit of more educated and knowledgeable employees who are out there in the world making connections with other business community members in their courses.
E-learning opportunities are also a good way to boost employee engagement.
(We think of employee bonuses separately from performance-based pay. Learn more about that idea in another of our articles.)
Give relevant gifts
No, we’re not suggesting bags of peanuts with the business brand sticker on the front. You’ll also want to think twice before giving them yet another company golf shirt. Instead, remember: By nature, a gift is focused on the recipient. Keep your gifts authentic by making them personal, useful, and valuable.
GIFT-OLOGY’s John Ruhlin noted in LinkedIn, “Personalized, useful gifts such as this will help you remain top of mind with employees. If you have to put your logo on something for people to remember you, it’s not a gift — it’s a trinket.”
Think about employees’ families, too
Maybe your business can’t afford to give every employee an expensive watch every year or a big cash bonus at year’s end. You can still show your people you appreciate them by thinking also about ways to include their families in your recognition.
You might host a great company holiday party for all ages. Or you could include employees’ loved ones on business-sponsored day trips, give childcare and kids’ tuition benefits, or give gift cards to a kid-friendly venue to make that Mom or Dad the hero to their little ones for the day.
Ask employees what they want
Another great way to make employees feel appreciated? Ask them what they want. Instead of taking the one-size-fits-all approach, you can survey individual team members about the bonus alternatives that best suit their needs. Someone with young kids or caregiving for an elderly family member may want time off while a millennial might prefer a gift card for a new restaurant in town. Checking in with your employees shows you care about their opinions, and that’s only going to help overall morale.