Bonuses are back, more popular than ever
Sign-on, spot and retention bonus programs are at an all-time high, according to a 2014 WorldatWork survey. The total rewards association’s “Bonus Programs and Practices” study found that all three are significantly more common in 2014 compared to 2010, and referral bonuses are also on the rise.
A downward trend for bonuses that began with the 2009 recession has been reversed. Part of the reason: Employers may be substituting bonuses for traditional merit raises.
“With continually small incremental increases in merit budgets, spot bonuses may be a means to recognize talent for special excellence during the year,” said Rose M. Stanley, WorldatWork’s total rewards practice leader. “Employers are using sign-on and retention bonuses to attract and retain the talent that they need,” Stanley said. “They are targeting spot bonuses as an additional means to recognize employees that are excelling when other forms of cash compensation have been restricted.”
WorldatWork defined the various programs like this:
Referral bonus: Cash award to current staff for referring new hires.
Sign-on bonus: Cash bonus typically given when an applicant accepts an employment offer. More organizations are offering sign-on bonuses and paying more, too. In fact, 41% of executives’ sign-on bonuses were worth more than $50,000.
Spot bonus: Informal recognition that is delivered in cash, spontaneously or on the spot.
WorldatWork found that 90% of employers give spot bonuses as special recognition, 80% for going above and beyond the call of duty and 72% for completing a critical project.
Nearly all organizations report that employees below upper management can win spot bonuses. The number of spot bonuses awarded in the past 12 months has stayed about the same for 67% of organizations, with almost a quarter showing an increase.
Retention bonus: Cash award typically tied to the length of service or some other milestone.
The survey found that most employee groups are eligible to receive retention bonuses at most employers. Clerical employees are the least likely, but still eligible at 49% of participating organizations.