The annual companywide bonus has been around for many years and is still widely used today.  It’s contractually ‘discretionary’ but it comes at the same time each year and people have usually planned to spend it before it’s even been announced!

It can cost a company a lot of money, but is this something valued by staff, or something that has grown to be expected and now falls into custom and practice?  In my time as an HR Consultant, I’ve not yet heard of a companywide bonus being viewed as a key retention tool, driving business performance or even a key motivational tool.

I have however seen employees up in arms when they’ve been told there will be no bonus this year, or it’s less than they got last year, even if it’s been obvious that business has been bad; it seems that it’s seen more as a right to have than a nice reward.

On the plus side, it’s easy.  No performance ratings to measure, people can buy something nice with it and it’s a chance to celebrate the company having another good year; but have you ever stopped to think that it could actually be demotivating your top performers?

You can probably remember a time in your career when you’ve worked your socks off, only for it to go unrecognised or unrewarded.  Worse still, if someone else in your team has really been slacking off, but you all get the same level of bonus.  It might not bother you that much the first time, but if it happens year on year it could become quite demotivating.

Of course it isn’t all down to a bonus.  Career paths, learning and employee engagement are all key to happy employees, but if you don’t have a strong HR Strategy or many tools to motivate and retain your talent, the companywide bonus may not be helping!

I’ve learnt that reward and recognition are two very personal things, and some of us need more than others.  Managers that take time to understand the individual needs and motivational drivers within their teams and having the flexibility to reward individually can be very powerful.

If you work in a large company where individual reward may initially be a step too far, creating an employee forum or focus group to find out what people really think could be the key to understanding what your workforce would value.  You may find it costs you less than your original bonus pot and could the key to unlocking productivity – or you may find your companywide bonus does tick all of the boxes, if so, I’d love to hear from you!