Dive Brief:
- S. Kumar, a tech and business commentator, writes at Time.com that businesses should pay bonuses twice a year.
- His view is that even if someone finds personal satisfaction in their job, money is an important motivator.
- Kumar believes that end of the year bonuses don't work, because even though it theoretically makes them work hard for the bonus all year round, 12 months is a long time and employees can lose their motivation for a number of reasons, including a lack of financial milestones along the way to indicate how they’re actually doing.
Dive Insight:
Kumar's simple solution is handing out bonuses twice a year.
He writes that handing out bonuses twice a year, by contrast, can mitigate uncertainty, send a clear signal to employees about how well they’re performing, reduce their resentment at being forcibly tied to the company for an entire year, and enable them to lead a more comfortable life with money in their pocket.
A semi-annual bonus also can be used to encourage employees to adjust their performance during the course of the yea, which can help employees improve their work product and increase their chances of a receiving a higher bonus in the next cycle. Finally, budgeting can benefit because employee compensation is often a large portion of a business’s costs. Handing out part of the bonus at mid-year can provide a more realistic assessment of the money left over to meet other operating costs and prompt the company to plan the rest of the year accordingly.
