The No-Bonus Year

It seems according to the headlines that we are in a no-bonus year. What do you do when you need to cut the annual bonuses for employees who are accustomed to seeing that annual check?

In rewarding employees traditionally, management relied on the classic combination of salary + bonus. In this structure, the bonus was intended to cater to esteem and recognition needs while also clearly being about performance pay. In Maslow’s classic hierarchy of needs, the bonus – typically given as cash – would cater to the two lower segments.

But, what does one do when the bonuses disappear?

The human needs illustrated in the upper segments of Maslow’s hierarchy cannot be met through cash compensation or bonuses. In the hierarchy, above bonuses sits recognition programs. If, because of the recession, you find you have a gap in your Total Rewards Package, now is the ideal time to examine how you are meeting your employees’ higher level needs through a strategic recognition program.

A strategic recognition program – sitting above bonuses in terms of catering to employees esteem and recognition needs can now be deployed to help overcome the gap created in this no-bonus year. During these recessionary times, employees are full of fear and uncertainty. Strategic recognition bridges the no-bonus gap by feeding your employees’ needs for psychic income – social acceptance, increased self-esteem and self realization that can never be met through compensation.

Are in the position of needing to cut or cut-back on bonuses? How are you demonstrating your appreciation for your employees instead? Do you already follow best practices by recognizing employees for their efforts frequently throughout the year? If not, what are you doing to show appreciation at this traditional annual recognition time? Share your thoughts in comments.

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