Workfloor dilemmas: not all my employees get bonuses
- Frances Gallimore
- 18 Mar 2022
- Edited 14 Jun 2023
- 3 min
- Managing and growing
Every day, the KVK Advisory Team gets questions from entrepreneurs about their workplace dilemmas. In the series ‘Workfloor Dilemmas’, we answer some of the most frequently asked questions. In this article: what can you do if not all your employees get bonuses?
The case: “I have a team of 10 employees, where the employees in commercial positions are entitled to a bonus based on their performance. Now there is a conflict in the team, because the office manager and HR consultant do not have a chance to achieve results that give them a bonus. How can I treat everyone equally?”
The team’s answer: As an employer, you must offer your employees at least the legally required employment conditions. But you can also reward them with secondary benefits (in Dutch), like a bonus scheme. There are different ways to reward employees with a bonus. For example, based on team goals or general goals. That gives every employee a chance to earn a bonus. In most cases, a bonus scheme is not required (in Dutch). You can check the collective labour agreement (CAO)to see how bonuses are arranged in your sector.
Dilemma: commercial positions versus support positions
In many sectors, it is common to reward employees in commercial jobs with a bonus if they meet sales targets. That builds extra commitment, and helps you keep your employees and earn their loyalty. But it can also cause jealousy, for example, if employees in supporting jobs do not get bonuses. As an employer, it is important to be clear about the bonus system, and about who is entitled to a bonus and who is not. You can prevent conflict and unpleasant surprises and build as much equality into your bonus system as possible by choosing one or more of the following 5 options.
Bonus scheme for everyone
Make sure all of your employees can earn a bonus, whether it is a money allowance or an extra free day.
1. Profit sharing scheme
Choose an annual profit sharing scheme (in Dutch) for every employee. In this bonus scheme, every employee earns a bit extra when the company makes a profit. The bonus does not depend on their own individual performance. If the company does not make a profit, then there is no profit share bonus that year. The profit sharing scheme often depends on the employee’s salary. For example: a percentage that is the same for every employee, depending on the amount of profit earned.
2. Set a common goal
Make your employees accountable as a team for achieving annual targets, such as entering new markets or acquiring additional customers. Many job positions depend on other positions. For example, marketing provides a potential new customer, sales brings the customer in, and the back office arranges the administration. Everyone needs each other to reach certain goals. Set these goals in your annual plan, and attach a bonus to it that applies to every employee and is also the same for everyone.
3. An alternative bonus for everyone
Reward employees who advance your organisation beyond their job description and make these bonuses available to everyone. One example is ‘referral recruitment’ (in Dutch), where you reward employees when they suggest a new colleague or customer from their own network. Or offer commission when your employees’ friends or family buy a product or service.
Bonuses can also encourage specific behaviour among your employees. For example: a bonus for not smoking, or a sports bonus to help save for running shoes. But avoid a not-sick bonus (in Dutch) because employees cannot control whether they get sick or not. This kind of bonus can cause conflict and arguments.
4. Reward personal development
Rewarding employees with a bonus based on their personal development encourages their professional growth. And this helps the growth of the company. Discuss the goals that an employee can work towards in a personal development plan (in Dutch). Make sure that all employees have a chance to get the bonus, even if employees cannot grow in their position or salary scale. For example: offer a bonus or an extra day of leave time for completing a training course.
5. Choose a loyalty bonus
Employees who stay help you avoid costs for recruitment and training. So, keeping your employees helps improve your profit. Reward your loyal employees with a loyalty bonus (in Dutch). For example, offer a fixed bonus for every 5-year anniversary, or raise their salary by a standard percentage each year. Do not connect the loyalty bonus with their performance bonus or promotion opportunities. The employee’s performance and promotions are tied to goals for growth, and not to the employee’s loyalty to the company. These are separate goals that your employee can work towards.