Appraisals and bonus time can be a celebratory time that brings excitement and happiness, or a time where people are left feeling disappointed and even wronged. How management handles this process and manages the delivery to the team can play a vital role in determining whether they retain their best talent or not.
As a recruiter, I often hear about companies that do a poor job of delivering bonuses; what most get wrong is thinking that compensation and bonuses are a process restricted to only a couple of months. Financial appraisals might be finalised at year end but the assessment should be a continuous yearly process. Below is my key advice if you want to motivate, reward and most importantly retain staff: let me put a disclaimer that its not rocket science or reinventing the wheel (Hint: majority of it is common sense and treating people the way you like to be treated.)
1) A Clear & Transparent Bonus Policy and Process
Transparency is key, if the process is not clear then the company and management will lose creditability with the team.
Every employee must have a broad understanding about how bonuses are determined, what their KPIs are. Prior to announcing the bonuses, it is best to communicate how the bonus pool looks like and remind the team of what factors go to determine pay-outs. It is best to have this communicated from key management personnel and leaders so that it reaches the desired audience and the message is uniform.
2) Managing Expectations
Ensure that you use appraisals and regular catch-ups to set expectations of your team members. This not only reinforces KPIs but helps the team reflect on their results. It is also a good time to discuss challenges to develop coaching and assistance where individuals may be struggling. This will not only help them perform at the best of their ability but help improve the company’s overall performance.
It is important to focus on the future and talk about career aspirations and how the company could assist them in their pursuits personally and professionally. This ultimately creates a personalised retention plan for your team members and helps them to find long term focus at the company.
3) Creating an Engaging Environment
Ultimately if you have achieved 1 and 2, even if the company does not achieve its targets to provide bonuses this last point is critical. Engagement has never been more important for the retention of your talent. A lot of firms conduct post-exit interviews to find out why people are leaving, which is a good practice. Firms should explore “stay interviews” to determine employee morale, motivation and even use them to gauge if there is any potential attrition in the future.
Creating a well-balanced, varied and meaningful work environment retains talent. If these boxes are ticked, organisations greatly reduce the risk of losing their talent and it also attracts other talent to the business.
It is no secret that the number of employee notices go up dramatically once bonuses for the year have been paid, so make sure that you don’t lose your best talent by handling it the wrong way!