Saturday, August 23, 2014

Should You Create Bonus Programs for Your Small Business Employees?



Choosing and Executing a Successful Bonus Program

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Bonus programs are on the rise in corporate America. The increase in these programs is due to companies having the need to identify and ensure they have the right talents to continue to grow. All different types of bonus programs, including signing, referral and spot programs, have exponentially increased over the past four years. While it is generally larger organizations that employ these programs, small business will start feeling the effects when they begin to compete for job candidates. Because of this, it may be worthwhile to investigate a bonus program for your small business.

Information on Signing Bonus Programs

Signing bonus programs are probably the least likely to be used in small business. Although uncommon, this type of bonus program can still be beneficial in certain situations. Signing bonuses are great for small businesses if they are standard practice in the industry, employers need to motivate desirable talent to move to the area or when attracting candidates with hard to find skills. It is important, however, to make sure signing bonuses are employed carefully. Consider staggering the bonus payment – this will help prevent any candidates who would simply use the bonus to “job hop.” It is also important to remember that this bonus cannot be a candidate’s sole attraction to the business but should be an addition to other employee development opportunities.

Information on Referral Bonuses

Referral bonuses are given to employees who refer new talent as job candidates who in turn get hired by the company. The theory behind this bonus program is that talented individuals know and are friends with other talented individuals – if a great employee refers someone for a position, chances are they will also be a great employee. To implement this type of referral program, it is important to develop a policy and procedure for how payment of the bonus works before presenting it to your staff. Ask questions such as,  "Should a referral bonus be offered for every position or just specific jobs?" "Is the program ongoing or is it only employed during times of need?" " Should the bonus be paid in full when the referral is hired, or partially paid out until the new employee makes it through a probationary period?" The answers to these questions will help guide how the program works.

Information on Spot Bonuses

Spot bonuses are given to employees “on the spot” for desirable behavior. These bonuses are most frequently rewarded for special recognition, project completion and going above and beyond the employee’s outline responsibilities. Larger companies have spot bonuses north of $1,000, but for smaller businesses, gift cards and small amounts of money can be just as effective. This is another bonus program that should be well developed before presenting it to employees – decide whether or not the bonus program will have levels, set a strict budget for how much of the business’s money will be used and make sure to publicize the program well once it is fully established. Studies have shown that employees who have goals to work toward often perform better and more efficiently.

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