by Don Lowman, Towers Perrin
It’s that time of year when many of you are preparing to communicate with employees about bonuses. Bonus levels are down in many companies, but they are still a staple of well-designed compensation plans and one of the keys to drive employee engagement and company performance.
Here are a few suggested Dos and Don’ts to consider as you prepare to communicate bonuses. Some of you may think these are really obvious. But given some of the horror stories I hear from employees in lots of companies, there are plenty of supervisors at all levels (including CEOs) who could benefit from these simple thoughts:
DO
1. Give employees a clear understanding of HOW their bonus was determined. Tell them as specifically as you can what factors you considered and how you arrived at what you are awarding them. If you applied judgment, explain to them what you took into account.
2. Reinforce with them what went well last year and what you would like them to try to improve in the coming year. Can’t think of any areas for improvement? Then you owe it to the employee and the company to think harder!
3. THANK them for their contributions and be specific with them about what those contributions meant and why they were appreciated. How many times have you heard an employee say “the money was nice, but your message meant even more”?
4. Prepare well for the meeting and think of the sound bites you want to make sure your employees hear and remember.
DON’T
1. Do not, under ANY circumstances, EVER say “I wanted to give you more but my boss wouldn’t let me.” You own these decisions, even if you would like to pay more.
2. Don’t apologize for not providing a higher bonus. If an individual’s bonus is less than last year, explain why.
3. Don’t get into a debate about the size of the award. Listen to their perspective if they disagree, but stay on message and don’t become argumentative.
4. Finally, don’t EVER put off having the bonus conversation for so long that the employee sees the money show up in her checking account before you have spoken with her about it! Nothing screams “I really don’t want to talk to you” or “I honestly don’t care about you” more than this too-often-repeated oversight!!
Despite the new and seemingly inexplicable executive bonus restrictions enacted into US law this week with President Obama’s signing of the “stimulus bill,” annual bonuses still play a vital role in most companies in linking pay and performance.
Well designed incentives, responsibly administered and well communicated, are one of the keys to building employee engagement and driving improved business performance. And I believe they are also one of the ingredients needed to help fuel economic recovery.
- Don
