Are you worried that your small business can’t compete with the bonus programs of larger companies?
You shouldn’t be.
It turns out, compensation isn’t the best way to attract and retain talent.
Glassdoor Chief Economist, Andrew Chamberlain, wrote in the Harvard Business Review about some surprising results of a recent Glassdoor study:
“One of the most striking results we’ve found is that, across all income levels, the top predictor of workplace satisfaction is not pay: It is the culture and values of the organization, followed closely by the quality of senior leadership and the career opportunities at the company. Among the six workplace factors we examined, compensation and benefits were consistently rated among the least important factors of workplace happiness.”
You can build a bonus program that shows solid company culture, positive leadership, and career advancement opportunities at little or no cost to your business.
Free Employee Bonus Options
Employee Bonus Option 1: Give the gift of time
US companies consistently rank low in the amount of vacation time given to employees.
Many employers increase vacation time based on time worked (e.g. an extra week of vacation for every five years worked).
There’s nothing wrong with such programs, but consider time off as a bonus. Be creative:
- Surprise day off
- Three day weekends
- Leave at lunch
In addition to time off, award employees with discretion in how they use their time.
When Google went public in 2004, the company introduced 20% time:
“We encourage our employees, in addition to their regular projects, to spend 20% of their time working on what they think will most benefit Google. This empowers them to be more creative and innovative.”
Google suggests that some of its most successful projects came from 20% time.
You might not have the luxury to allow employees to spend ⅕ of each week on personal projects. But, giving employees some ability to create their own projects gives them ownership in your mission and builds trust between leadership and workforce.
Flexible working hours and remote work are other alternatives for awarding high performing employees. If employees achieve the goals you set for them, give them the ability to control their schedule.
Use time as a bonus incentive. Your employees will appreciate your trust in them. You will enjoy a more productive workforce.
Employee Bonus Option 2: Serve your employees
The Glassdoor study identified “quality of senior leadership” as important.
What does that mean and what does it look like?
There’s no better sign of genuine recognition than reversing typical roles and serving your employees.
Take off your business leader hat and treat your employees:
- Make a meal for employees
- Write personal thank you notes
- Rotate a VIP parking spot for employees
- Chauffeur employees for a week
Employee Bonus Option 3: Employee recognition
Achievement certificates, title promotions, and company-wide announcements give bonuses a more formal feel.
While such bonuses are free to your business, they can become very valuable to your employees. If you implement such bonus programs well, employees will come to appreciate the awards more than money bonuses.
Consider an example from a Fortune 1000 company.
A Vice President of sales at the company periodically awarded an elf hat to a non-sales employee who implemented a creative strategy to drive sales.
The elf hat itself was worthless. It came from an old toy that the VP’s child had long given up.
However, the hat became a source of pride, and incentive for non-sales employees to assist the sales teams. Employees competed with each other trying to win the hat away from other employees. The sales team eventually began nominating non-sales employees for the award. This free bonus became coveted within the company.
The elf hat was a free bonus that built company culture through quality leadership, and identified employees to promote. The hat was a completely free bonus that achieved the top three elements from the Glassdoor study.
Low-Cost Employee Bonus Options
If you can afford to spend a little money to award employees, your bonus options expand.
Employee Bonus Option 4: Company swag
As the Glassdoor study showed, culture is important. Once you have established a positive culture where your employees want to work, reinforce your employees’ love of your culture by awarding them with low-cost reminders of your company. Consider awarding company-branded:
- Coffee mugs
- Water bottles
- Bumper stickers
- Mobile phone cases
This method only works if your employees identify with your company culture and values. In his book Zero to One, Peter Thiel hints at the power of such free company-branded bonuses:
“[Y]oung people in [Silicon Valley] go to work wearing T-shirts. It’s a cliche that tech workers don’t care about what they wear, but if you look closely at those T-shirts, you’ll see the logos of the wearers’ companies–and tech workers care about those very much….The startup uniform encapsulates a simple but essential principle: everyone at your company should be different in the same way–a tribe of like-minded people fiercely devoted to your company’s mission.”
If your employees buy into your culture and are dedicated to your mission, they will appreciate you awarding them any cheap, commonplace item branded with your logo.
Employee Bonus Option 5: Team building events
Go a step beyond company-branded swag.
Take your high achieving employees to team building events to cultivate your culture. Many event venues have rooms for both entertainment and meeting space.
Mix some fun into your work:
- Escape rooms
- Top Golf
- Happy hours
- Company lunch/dinner
- Comedy club
We’ve all heard that company leader proud of the culture where employees work hard and play hard.
The phrase is overused, but the sentiment is spot on. Employees want to work with people who have fun together. Rewarding employees with a fun event is a great way to give employees what they want.
Employee Bonus Option 6: Ongoing Learning
Career advancement was in the top three of the Glassdoor study. Nothing shows employees your interest in their career development more than you investing in their continuing education.
Education investment can be expensive and long-term, or cheaper and a one time expense:
- Tuition reimbursement
- Certificate programs
- Training programs
If you can afford larger education benefits, you are likely to build greater levels of loyalty. However, any investment in your workforce’s personal skills shows you are dedicated to developing their career.
Show your employees that you are dedicated to making them better. In turn, they will improve your workforce.
Employee Bonus Option 7: Subscriptions
Subscriptions remind employees of your appreciation on a monthly basis. Subscriptions can be expensive, or cheap.
You can spend money on something for your employees that they would not typically spend on themselves.
Subscription examples include:
- Book club
- Wine of the month membership
- Gym membership
- Magazine subscription
- Food delivery service
Employee Bonus Option 8: Cash alternatives
We now know that money can’t buy and retain the best employees.
However, employees never complain about receiving cash alternatives.
Oddly enough, cash alternatives are often better received than monetary bonuses when the bonus amount is low.
For example, a $100 cash bonus might be seen as offensive because the amount is insignificant compared to an employee’s annual salary.
However, a $100 gift card to a fancy restaurant can be a delightful surprise.
Think creatively when choosing cash alternatives. Find gift cards for goods and services that employees don’t typically spend their own money on:
- High-end restaurant
- Spa day
- Dry cleaning
- Travel voucher
Surprise employees by paying for expenses that employees must pay, but don’t want to:
- Power bill
- Gas bill
- Loan repayment
- Childcare payment
An effective bonus program attracts new, talented employees and retains that talent. Fortunately for cash-strapped small businesses, the best way to do this is to build a positive company culture, demonstrate effective leadership, and provide career advancement opportunities.
Create a bonus structure that focuses on these three elements, and the quality of your workforce will improve.