Having the right tools in your recruiting and re-recruiting tool chest will help you become an employer of choice for both existing employees and promising candidates.
By: Will Helmlinger
As the talent war heats up, you must have the right tools in your recruiting and re-recruiting tool chest. One of your tools is a solid bonus program.
Many possibilities exist, but the plan that fits your needs requires research. Once you've done your research, you can then develop a well-thought-out plan, followed by an effective implementation process.
One or more of the following plans may fit your company. Or perhaps it will be your own hybrid. Start by understanding and researching your options.
Profit Sharing
Profit sharing is exactly that ? a share of the company profits. Often, a preset percentage of a company's profits is allocated (averaging from one to 5 percent of your profits, or a fixed percent you, your chief financial expert, and legal counsel determine is fair to the company and your employees). Employees normally participate at a preset level, often a percentage of salary (average from 10 to 20 percent of base salary; senior managers and executives may receive an equal or higher percent). Percentages vary again depending upon how "competitive" you want to be in the marketplace. Whatever your choice, make the percentage impactful to your employees. Too small a reward is damaging.
Gain Sharing
Gain sharing can be used in any company. Positive productivity change is an example where a payout is made. The "gain" needs to be based on sustainable factors and not simply be a one-time extraordinary event. Employees who help the company create improved and sustained quality or productivity changes should be rewarded. Bonuses of these types might be paid monthly or quarterly. To delay them any longer will lessen the immediate impact needed for employees.
Spot Bonuses/Spiffs
Spot bonuses ? or spiffs ? are excellent ways to instantly reward employees for their contributions. Recently, our company gave a spot bonus to the employee who helped us title our new newsletter. The list of possibilities is endless.
Spot bonuses are designed to provide an immediate gratuity to an employee for a specific accomplishment. You may want to limit spot bonuses to a maximum $50. And always consider any tax implication for this or any bonus program.
Non-Cash Awards
One example is an "Employee of the Month" program. These programs are fabulous sources of recognition for a job well done. Rewards might include a picture in the newsletter, a plaque for the employee or their name added to a master plaque. Perhaps a special parking spot is in order. Be creative. Often "Employee of the Month" programs require minimal investment. But be consistent with your selection criteria; employees will see through contrived programs.
Another "non-cash" award might be stock options. Consider your size, growth plans, exit strategy, and every other factor before implementing a stock option plan. And always consult with the appropriate professionals to ensure the plan meets legal standards.
Signing Bonuses
In the dot.com era, signing bonuses were all the rage, and today, they're re-emerging as a recruitment tool. Signing bonuses should be selective. Candidates may be giving up vesting in a 401k or retirement plan by leaving their current employer for your company. They could lose commissions or bonuses if they leave before quarter or year-end. Others may have retention bonuses with their current employers. You will have to decide if paying a hire-on bonus is appropriate to attract the right people for key roles. Finally, verify the specifics of what your candidate is losing before giving them the cash.
Referral Bonuses
Have employees recruit talent for you; then pay them! Referral bonuses might range from $100 to $1,000 or more depending on the job, your industry and the size of your company. All too often companies attach "strings" to referral bonuses. "Strings" sometimes include requirements that both the employee and new hire be active employees 90 days after hire. Consider this. If you place an ad, all publications will bill you, regardless if you hire a candidate. They're not going to wait 90 days for payment. Neither should your employee. Immediate gratification is a powerful recruitment tool.
Retention Bonuses
Retention bonuses are just that, a way to retain talent. Yes, this is a type of "golden handcuffs." Yet, a significant investment may not be necessary. The job, your company, your clients, and your industry will determine the amount of bonus.
Retention bonuses can also include a financial reward for remaining with the company for a specified period of time. Longevity rewards are also a powerful recruitment tool. Payouts should be annually on the employee's anniversary date.
Sales Bonuses
Sales commissions or bonuses are probably the most typical bonus. A great sales person is not going to join you if he doesn't see some sort of "pot of gold" at the end of the rainbow. Any bonus plan needs to be outlined thoroughly and given to the employee in writing. Outline the specifics in detail; include when payouts will be made. Make a condition of payout that the employee is an active employee, in good standing, at the time payment is made. It's best that sales bonuses are made when "revenue is recorded." And always have your sales plan reviewed by legal counsel.
Discretionary Bonuses
Discretionary bonuses are based on your desire to reward employees for their excellent performance. Each time you give an employee a "raise," you increase your fixed costs. Having a discretionary bonus plan based on company profitability allows you flexibility to provide bonuses for a job well done, in times when you are profitable. As with profit-sharing, pre-select an amount for the pool. Establish set criteria for employees to receive these bonuses, and reward high performers with significant bonuses. Payouts can be quarterly, semi-annually or annually.
Certification Bonuses
In certain industries, certifications will impact directly your ability to win or retain business. Offer a cash reward for becoming certified. Bonuses might range as high as $1,000 to $2,000 or more. You set the amount. And pay it out with no strings attached. Whenever practical, further support these bonuses by paying or reimbursing any certification training expenses.
Developing, implementing, and maintaining a solid bonus program sends a clear message to the marketplace that you reward talent. Track how your bonus programs affect your recruitment efforts, and how they positively impact employee re-recruitment. You should be pleasantly surprised at the results.