Recognise This! – When and how to use bonus budget effectively can often be better determined through frequent, timely recognition and less reliance on bonus overall.

In my last two posts on Compensation Cafe, I shared two pieces of research – one from academia, one from the workplace.

First, in “Want More Innovation? Offer Lower-Value Rewards,” I relayed academic research conducted to see if offering employees more high value rewards for innovation would generate a better innovation pipeline than offering low value awards. Findings showed giving large rewards exclusively works against a company’s intended goal, actually delivering the opposite of the desired results.

As I pointed out in the post, this is where calibration of reward value plays an important part. If the goal is encourage a culture of innovation, then several award levels that recognise contributions to idea generation, execution and ultimate result are more appropriate. Rewards (and amount of reward) depend as much on level of effort, impact and result as on contribution of ideas. This kind of structure not only encourages innovation idea generation, but also willing hands to bring the ideas to fruition and all that process entails.

Then, in “The State of Bonus Programs: Increasing on All Fronts to Find, Keep and Encourage Talent,” I shared research from WorldatWork on bonus programmes from the perspective of compensation professionals in the workplace. Findings show an increase in all forms of bonus programmes tracked (referral, sign-on, spot, and retention), reflecting the turnaround in the economy, the re-invigoration of the war for talent and the attempts to find other ways to recognise excellence beyond diminishing merit increase budgets. Indeed, spot-bonuses receive the most budget of all programmes with, per the report, “While only approximately one-third budget for sign-on and retention bonuses, 41% budget for referral bonuses and 53% budget for spot bonuses.”

Click through the above links for the full posts, then come back here and tell me: which type of research do you value more? Academic or workplace? Why?

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