Many employers like to offer employees performance bonuses; most consider them to be a great way to keep good workers happy and motivated.
But what happens when those bonuses go to people who haven’t earned them?
A new Towers Watson Talent Management and Rewards Pulse survey of Canadian and U.S. firms reveals that nearly one in four employers (24%) issue some form of incentive payout to staffers who fail to live up to performance expectations. Furthermore, 18% of companies give those who are bonused the same payment, regardless of the degree to which they’d excelled.
Why? According to researchers, these companies have forgotten (or chosen to neglect) the role of performance in determining the degree to which their employees are rewarded. “Many organizations are paying for the status quo, treating their annual inventive programs as a de facto profit-sharing plan,” they write in an infographic.
Many organizations are paying for the status quo, treating their annual inventive programs as a de facto profit-sharing plan
It’s not just an issue of unnecessary spending; it’s also a matter of morale. Researchers found that fewer than half of employees surveyed feel high performers in their organization are rewarded for performance. And that can lead to a serious case of itchy feet among star performers.
In a different study by Towers Watson (this one released in 2012), most employees said their incentive plans were ineffective, a poor driver of engagement and a weak motivator to join (or stay at) a company.
The takeaway is that there’s serious room for improvement in the bonus programs of at least one-quarter of all businesses. “While the vast majority of employers have some type of annual incentive plan, the way some incentive plans are designed and viewed by employees raises the question of whether employers are getting a good return on their investment in these programs,” says Towers Watson spokesperson Laura Sejen. “Companies may need to take a hard look at the design and delivery of their incentive programs to ensure they are meeting their objectives within the total rewards portfolio.”
The 2013 survey polled 121 organizations in Canada in the U.S. in June and July of this year.
Peer advice: Are Bonuses A Good Motivator?
Have you ever bonuses out a sub-par employee? Do you think it’s better to offer higher rewards for better performance, or is a more democratic, one-size-fits-all approach more beneficial? Share your thoughts by commenting below.