Giving your employees cash or other employee incentives that reward them for their work when your small business prospers makes a great way to keep valuable staff members motivated and loyal. Consider implementing a budgeting plan that includes a portion of your profits set aside for rewarding employees.
The Importance of Rewarding Employees
Your employees usually know when your business does well. Sharing the profits helps keep employees loyal and dedicated to putting forth their best efforts. Most employees put in extra effort when they see that your business’s success puts additional money in their pockets. On the other hand, if you fail to share profits with your team, you basically send the message that they have no financial stake in your success or failure.
Be creative in rewarding employees, and find ways other than cash that show your appreciation. Instead, use rewards such as gift cards, office perks, or paid time off from work. Try to offer incentives regularly rather than just in the form of annual bonuses as more frequent rewards work better for continual motivation.
Budgeting for Incentives
How much should you budget for employee incentives? Some companies pay out incentives that equal up to 10% percent of payroll, but the average employee recognition budget sits at approximately 2 percent. One way to figure this ties employee rewards to performance. Run profit/loss reports regularly throughout the year, and when you see a significant increase in net income, reward your employees accordingly.
Even during times when profits run lower, you can and should still recognize employee efforts and achievements with incentives. For example, you may want to reward employees responsible for increasing efficiency in their departments or who develop outstanding advertising campaigns.
Your business can’t succeed without the work of your employees, making it important for small business owners with small teams to retain good workers. You can accomplish this goal easily by sharing the ongoing success of your business with your employees.