Offering a great compensation plan to employees that includes benefits, bonuses and health insurance, helps make your job offers stand out from other companies, boosting your recruitment efforts. It also benefits your company by creating a happy work environment that keeps employees loyal.
But compensation can mean a lot of different things; for example, consider how some of Indeed's top-ranked companies reward their employees. Costco, the job search company's top-rated workplace for compensation and benefits, pays employees a minimum wage of $14/hour and most employees average $22.50/hr. Apple, also on the list, gives employees 25% off its products and $500 off a MacBook every three years. In-N-Out Burger compensates managers so well with pay and bonuses that some earn more than $100,000 per year.
So, what types of compensation are common for employee incentive programs? There are several.
Examples of Employee Incentive Programs
Cash is King
Employees who meet certain milestones or are top performers may receive a one-time cash bonus. This type of compensation program includes employee referral programs that encourage employees to recommend and recruit qualified potential candidates to the company. Bonuses may be given for client referrals, reaching a sales goal or doubling production rates. Implementing this type of compensation program includes identifying and tracking milestones while clearly communicating requirements to employees.
A Piece of the Pie
Profit-sharing rewards employees when the company meets or exceeds annual profit goals. One downside to this type of compensation program is that profit-sharing generally benefits management most when it's distributed as a percentage of annual pay. According to The Balance Careers, it's not uncommon for a senior executive to receive 40 to 50% of his or her annual salary. Yet, on the pro side, employees know that if the company succeeds, they'll be rewarded, motivating them to do their best work. Setting up a profit-sharing compensation plan usually includes arranging a trust for money paid out to employees, along with tracking company assets and determine which employees are eligible.
Stay for Extra Pay
Retention bonuses are paid to employees who stay with a company a certain length of time and are typically worth about 10 to 15% of an employee's salary. This type of compensation is also given if an employee stays through an important time with a company, like a manager, acquisition or crucial production period. While retention bonuses aren't as common as a one-time bonus, some companies are finding them successful at retaining critical personnel. To implement, decide how many years employees must have under their belt to receive this bonus and if it pays in increments like every five years.
Can't Put a Price on Time
Non-cash compensation plans are a good option for companies that aren't financially comfortable enough to give out cash to employees. Plus, some of your employees may already view their salary as the main work incentive and any additional cash may not hold long-term value. Non-cash incentives can include food, tickets to locla events, extra PTO, mugs and so on. One key to consider when establishing a non-monetary compensation program is to ensure all employees are eligible for the rewards.
BirdDogHR's Compensation Management software takes the guesswork out of rewarding high-performing employees by managing salary increases, bonuses and comparing market data with one easy-to-use system. Plus, you can access it from anywhere, filtering data based on departments to make sure your company is attracting top talent by offering competitive salaries.