Company bonus schemes are designed as an incentive that every employee can look forward to throughout the year. If a business is on track to reach its targets for the year, those that have hit their targets will be fortunate enough to gain a lump sum as a thank you for their hard-work throughout the year.
Bonus schemes are often calculated as a percentage of an employee’s salary or title dependant. As part of employee well-being, organisations often turn to their bonus scheme as being the be-all-and-end-all of attracting and retaining talent however this isn’t always the case. Unfortunately, employees are often living day by day, attempting to stay afloat on their salary alone with the rising cost of living and a bonus scheme does not always have much of an impact on that.
Whilst employees who receive bonuses each year count themselves lucky, there is often a disconnect between the fairness of an employer’s bonus scheme and what’s actually going on in the business. Giving employees a bonus based on a percentage of their salary has often inadvertently cut out those that are the most hard-up and struggling on lower salaries, whilst making those on higher salaries, wealthier. This is not an entirely fair system as despite those that are often on higher salaries having more responsibility within their job roles, often sheer workload can be passed down the ladder to those more junior on lower incomes, making traditional bonus schemes seem unfair to many.
It was recently reported that social media giant Facebook will be changing the criteria on how it gives out bonuses to team members. Previously, the company’s bonus policy was based on individual performance targets, how the employee has helped grow company revenue, implemented efficiencies, increased monetary savings or their customer/user base. This has now evolved from the traditional method to reward those that are helping to combat the issues Facebook has had in the past – such as ‘making progress on the major social issues’ – meaning employees that have helped to tackle the spread of fake news, data privacy issues and security measures will be rewarded through the bonus scheme.
Clearly, this is an interesting approach to an employee incentive scheme. Not only is it moving away from the traditional model of that; ‘the higher an individual earns, the bigger their bonus’, but it is helping to address the fundamental issues that Facebook is having as an organisation. It is also implying a step in the right direction towards the eradication of issues like fake news. However, this type of scheme may rule out more junior members of staff who might not have any control or power over the issues they will measure against, and thus not making much of a difference to the company.
Facebook, however, is not the only company who have tried to re-shape the traditional, somewhat unfair bonus scheme. Last year, United Airlines announced they were scrapping their bonus scheme which rewarded employees with up to $375 for each quarter that the airline met their operational goals and instead, implementing a type of employee ‘lottery’. Whilst the lottery offered huge prizes like $100,000 or a sports car, the changes did not go down very well. To participate in the lottery, employees had to have a perfect attendance at work – something which should not be linked to an employee benefit. This caused many complaints, particularly from mothers with ill children who had no other choice but to stay at home to look after them. The judging criteria infuriated workers, with many petitioning this to change, which it shortly did. This is an interesting example which suggests that whilst the traditional bonus scheme model may be outdated, new initiatives are not always the best idea.
It’s becoming incredibly important to maintain employee happiness in the workplace, particularly at a time where an individual’s loyalty to an organisation is skewed by increased choice in the jobs market. It is essential that employers get the balance right between rewarding great work and maintaining equality between employees, whilst looking after their financial well-being regardless of their level.
Financial well-being is something that can often be taken for granted by those at the top, but unfortunately it is a problem that many are facing. At GettaSub, we recently created a report entitled ‘In work but cash poor’ which included conducting research into employee well-being and happiness regarding their finances. We found that a shocking percentage of those surveyed were struggling with financial woes. The survey, conducted by independent polling company Censuswide, quizzed 2,000 UK workers various questions about their personal finances and issues faced, despite in work. Out of all the results, we were mostly shocked to find that 34 per cent of workers were facing sleepless nights due to financial worries.
The research also found that one job was not providing enough income for workers and that 32 per cent of those polled were actively considering taking a second job in order to stay afloat. This is particularly concerning as working two jobs can increase the stress and pressure employees are under. We also discovered that salaries just weren’t enough to deal with unexpected issues, with nearly two in 10 people having to borrow money from friends and family in January in order to make ends meet. This research is truly concerning about the future of employee happiness within the workplace.
Employees must begin to take more responsibility around these financial woes of their employees. Giving out a bonus once a year that is based on a percentage of an individual’s overall salary will not help enough to manage these concerns. Employers can help more by bringing in short-term, sensible loans that work via their payroll in order to give employees the boost they need to manage.
Interested in unconscious bias and rewards in the workplace? We recommend Unconscious Bias in the Workplace training day, and Reward Strategies to Deliver Business Objectives training day.