4 Tips for Giving Out Raises & BonusesShannon Hall
According to research by LinkedIN, more people switch jobs in January than any other month. Employees who are disappointed after their reviews and bonuses after the holiday season are much more likely to look for other opportunities. Getting this process right is key to keeping top employees. Below we have 4 tips for giving out raises and bonuses as the holiday season approaches.
Research Market Rates
It’s important to stay up to date on market rates in order to remain a competitive employer. You can get a good idea of standard rates in your local market using Indeed to search job titles and salaries within the radius of your specific location to come up with a median market salary. You can also use Glassdoor.com to see what salaries employees have reported on the profiles of your competitors. Knowing the average salary for the roles you employ can help you to determine an appropriate raise. This way you can stay on top of trends in your local market and keep your raises and bonuses in line with what other companies might offer.
Use Goal-Oriented Evaluations
Employee evaluations are an important tool when it comes to determining raises and bonuses. Evaluations should be goal-oriented in order to have measurable factors for determining job performance. SHRM (the Society for Human Resource Management) recommends that performance goals fit into the SMART format: Specific, Measurable, Action-oriented, Realistic, and Time-Bound. Goals can be measured objectively and backed up with recorded information, keeping evaluations fair and free from rater bias. An objective evaluation of job performance can help you decide how to assign raises and bonuses among your employees.
Analyze Performance with Multiple Sources
When evaluating an employee’s performance, it’s always best to get multiple perspectives. Getting feedback from an employee’s direct supervisor can be helpful when determining the extent to which an employee should be rewarded for their performance. However, it’s also extremely valuable to get feedback from an employee’s co-workers. The process of getting input from multiple sources on varying levels is often referred to as 360-degree feedback. Between these sources, comments on an employee’s performance that overlap will solidify an evaluation of their performance, and any incongruous feedback should be investigated further. Receiving information from multiple sources will help you to get a much more rounded idea of an employee’s behavior and performance, and it will help you to determine an appropriate reward for that performance.
Reward High Performing Employees More than They Expect
According to the Pareto Principal, 80% of results come from 20% of causes. This implies that most of your company’s success comes from a few top employees. With this in mind, it’s important to designate bonus money to reward high performing people. There is no reason why you can’t pay your top performers very high bonuses, while only giving a small amount (if any) to mediocre employees. Good employees who do not feel rewarded or appreciated for their hard work are much more likely to leave their job. A report by TinyPulse concluded that lack of recognition is a top contributor to employee dissatisfaction. According to the report, 22% of employees who did not feel recognition at work had been on an interview in the past 3 months. Recruiters often target high performing employees when headhunting out of businesses. In order to keep top performers with your company, it’s important to reward them for a job well done.
January is the most active time for jobseekers. Some of this activity can be attributed to dissatisfaction surrounding how their company handles raises and bonuses. It’s important to get this right in order to keep your good employees satisfied and to keep them from looking for other opportunities.
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