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Building Bonus Programs

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You have determined your Compensation Model, narrowed down your Pay Ranges, and implemented a program to regularly assess and evaluate your Pay Structure. Now it is time to look at another key piece of the puzzle: Bonuses.

Determining the Right Bonus Structure for your Company

There are a variety of reasons employers offer bonuses, and nearly as many different types of bonuses. The key thing to remember with bonuses is that how, when, and why they are paid out is an important reflection of the company’s culture and speaks volumes as to what a business owner or management team really values.

Types of Bonuses

Depending on what your organization values most, you will want to consider different types of bonuses.

Don’t forget, pay elements should be designed to encourage specific types of employee actions. And, bonuses should reward those employees that perform beyond expectations in a merit-based system or the most long-standing loyal employees in a seniority-based system.

Merit Bonuses

Merit bonuses reward employees for meeting or surpassing measurable performance goals, targets, or quotas. Merit bonuses are favoured by employers who place a lot of value on results, and who seek to motivate their employees to strive to meet or exceed specific goals.

Achievement Bonuses

Employers often offer achievement bonuses to employees who have furthered their knowledge by completing a course, certificate or designation. Employers who provide achievement bonuses recognize the value in employees who seek to improve their knowledge and skills, and who then bring that new knowledge back to the company.

Annual Bonuses

Some employers offer an annual bonus, often in December, that is not tied to any specific goals or achievements. An annual bonus is often seen as a thank-you to employees. It can also be seen as the passive approach as these tend to be applied in broad strokes across all employee groups.

Other Bonuses

Other types of bonuses include signing bonuses used as a recruitment tool and referral bonuses paid when an employee refers another individual who goes on to accept an offer of employment.

Your Honiva HR Services Consultant can help you determine what values are most important to your company and will help you set up a successful bonus program to help support those values.

Here to Help

We can be reached for a free confidential consultation at +1-403-470-5350 or [email protected] For further details on additional HR service offerings, please visit our website at or follow along for more informative tips by joining us on LinkedIn, Facebook, Twitter, or Instagram. We also run a complementary LinkedIn and Facebook group called “Insights by HonivaHR” where you can access free information on how to become an effective and legally compliant employer. Or you can sign-up for our quarterly newsletter to have help sent straight to your inbox from our company homepage.

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