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Are seasonal bonuses effective?

‘Tis the season for holiday and end of year bonuses... Do annual monetary rewards still keep employees motivated?

At a glance...

  • The ancient business strategy you’re still using

  • A new approach to compensation

  • Business Therapy Episode #14: Should your company give you a seasonal bonus?


Why are you using an ancient strategy in your business? Well, not ancient... but end of year bonuses and annual compensation review cycles originated when the business world was significantly slower. In the 1970s and 1980s, computers still took up rooms and most Americans did not have cell phones. Technology was expensive and information sharing was slow. As a result, the pace of business was slower and more manual than today’s world of software and automation. Would you use a decade old strategy designed for slower times in any other parts of your business? Why is it so common? If the way we work has changed dramatically over the past 40 years, and even more so over the past two, then the way businesses evaluate and compensate employees should change as well. Does it really make sense to reward an employee for the success of a project 8 months after they completed it? Today, the expectations of employers and businesses stretch beyond the role of paycheck provider. Employers are expected to care more about employees and provide more comprehensive benefits. If they fail to meet their end of the bargain, business will be left to deal with high turnover and low employee morale.


Incentivize by being human Employees' personal lives affect the way they work and the compensation that they need. It is unrealistic to expect an employee to keep life and work entirely separate. Parts of non-work life (like marriage, kids, health) have major impacts on an employee’s mind and financials. Thus, employees and employers should have ongoing conversations and reviews about compensation. By having compensation reflect the needs of the employees in real time, employers can act as a part of the employee’s support system rather than a source of problems. Reward when most valuable Annual bonuses are delayed rewards. Why should a person be rewarded today for something accomplished months ago? The Great Resignation of 2021 has made it clear that people are not afraid to leave their jobs if they are unhappy. If left unfulfilled by their jobs and undervalued by their employers, employees will leave. Employees stay and thrive when they are appreciated and supported. As the Great Resignation has shown, employees are no longer sticking around for that end of year bonus that may or may not come. Challenge the norm Today, there is no existing alternative system for compensation and incentives... but that does not mean that you are stuck with the existing annual system. It is up to you, as a manager, to take the steps to create new compensation and incentive structures within your organization. Though changes in compensation and incentives cannot be made with the flip of a switch, implementing and personalizing compensation structure and a frequent review process will help move your organization to a more present and human way of business.



Business Therapy #14- Should your company give you a seasonal bonus? It's the season for giving! That means it’s time for the yearly employee bonus. But do they really have an impact on employee productivity? Does your current bonus structure motivate employees? And what do effective employee incentives look like? This week, Sam & Jon discuss how you can effectively incentivize employees. You'll learn: - How you can boost employee productivity while keeping them happy. - One simple thing you can do to find employee incentives that work, for each member of your team. - How to motivate an employee to go above and beyond, even if you have a generous bonus structure that isn’t doing the trick. Plus, more! Tune in. Take us with you on your morning commute or stroll to your home office:

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