Getting the biggest bang for your bonus buck
  • leadership
  • Blog post

Getting the biggest bang for your bonus buck

The end-of-year holidays are a time when many organizations hand out annual bonuses.

If you’re planning to do so, you might want to remember these tips from HR consultant Carl Greenberg, which will help you maximize the business impact of the bonuses you award:

1. Make sure the bonus means something specific. If the company has done well during the year, it’s tempting to just hand out bonuses as general largesse. But you’re missing an opportunity. If instead you make sure each bonus reflects an employee’s real contribution, you both communicate the person’s individual value to the enterprise and create a motivator for future performance. Yes, it takes more time to figure out how much each person should get, and you should have a formula in place beforehand rather than being arbitrary. (You don’t want people screaming about discrimination.) But it’s definitely worth it.

2. Discuss the bonus as you give it. Don’t just put bonus envelopes in employees’ mailboxes; sit down and talk about the bonus face-to-face with each of them. This allows you to drive home the recognition you are giving with a personalized statement of appreciation, and also allows you to explain the amount of the bonus (or the fact that there isn’t a bonus) in such a way as to prevent any feelings of unfairness or confusion. And by the way, it’s most important to talk with employees who, in your view, haven’t deserved a bonus. Tell them exactly why that was, and explain what they can do in the coming year to get a bonus the next time around.

3. Don’t be ashamed of giving non-monetary bonuses. Sure, people like extra cash to spend at the end-of-year holidays. But if your business just isn’t in a position to “show them the money,” you can still give recognition that will motivate employees. One way of doing that, Greenberg says, it to write each employee a personal note explaining why they are valued and appreciated, and that if times were better, you would have liked to reward them financially. Such a note “goes a long way, especially if it’s from the owner of the company, or someone who is not the direct boss,” Greenberg says.

See Greenberg’s website at

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