In these trying times, when many companies are doing their best to simply stay afloat, rewarding employees is a tricky proposition. Gone, for instance, are generous annual bonuses. But a new trend toward “spot bonuses” is taking bloom—and might be a good option for your organization.
As their name implies, spot bonuses are paid “on the spot” as reward for a specific behavior or outcome. They are a good tool for the employer because they are typically a smaller amount of money than annual bonuses (ranging from a couple hundred dollars to a few thousand), yet they are a great morale booster for employees—especially crucial in this turmoil-filled year, where COVID-19 has a lot of people worrying about the effects of the virus not only on their own and family members’ health, but also, on the status of their jobs. With unemployment rates suddenly at record highs, doing something to recognize the difficulty employees are facing is simply a smart business decision…and one that is becoming increasingly common. A 2018 study by PayScale found that spot bonuses are tied with referral bonuses as the second most common form of variable pay used by employers, following annual individual bonuses.
There are plenty of benefits to offering spot bonuses to your employees. These include:
- Increased job satisfaction. When employees are recognized for their contributions, they tend to feel more positive about their jobs. There’s actually science to back this up: neuroscientists found in a 2001 study that the promise of a financial reward stimulated the “reward circuitry” of the brain and led to increased happiness. Engaging this reward circuitry more often, such as through spot bonuses tied to both individual and company performance, will generate this positive brain activity and help establish a connection between personal accomplishments and corporate results.
- Improved team performance. Spot bonuses are a great motivator for improving team performance. Because the pandemic has led to many people working remotely, they’re an excellent way to foster a kinship with coworkers whom they may not have seen in quite a while. When employees are encouraged to spend the money on others (this is known as a “prosocial bonus”), they tended to buy gifts for team members or treat one another to lunch. In fact, teams that received prosocial rewards outperformed those that did not. This is a win-win for both the employee and the company, resulting in happier, more satisfied workers and higher-performing teams.
- Demonstrating company priorities. Spot bonuses are about more than just money. By explaining that the bonuses are being paid because the organization is meeting its goals, you’re showing how much you value your employees. This is a great time to address the current state of your business, talk about new initiatives, share your vision and direction, and give employees an opportunity to ask questions.