Congratulations! You have made your business into a success and you’re turning a profit; enough to give to pay out some bonuses for all the hard work that has got you to this position.
But how do you go about doing that?
Year-end bonuses have always been a hot topic and subject of much debate and controversy. According to Instant Offices, the ‘will they, won’t they?’ guessing game can become quite a stressful one, but it seems that overall, there has been an increase in the amount being paid out in bonuses.
According to the ONS, £44.3 billion was paid out in bonuses in the 2015/16 financial year, which is a 4.4 per cent increase from the previous 12 months. That said, the finance and insurance industries have not been so lucky with an average slump of £5 billion since the economic downturn in 2007/08, while the rest of the economy has seen impressive growth.
And the areas with the most generous employers? Global account managers, chief operating officers and chief technology operators lead the pack with a median annual bonus of £33,500, £30,000, and £25,000, respectively.
Which jobs offer the highest bonuses?
There are some jobs that pay cash bonuses that are far above the average, like enterprise sales managers who, according to job site Glassdoor, can earn annual bonuses of up to £55,000, which is almost double the UK’s national average of £28,200.
Interestingly, kitchen designers also top the list of high earners, receiving larger bonuses than CEOs. On the other end of the spectrum, people employed in health and social work had the lowest average bonus of close to zero. Further stats show that the average bonus per employee remained at around £1,500.
The industries with the highest annual bonuses are:
1. Enterprise sales manager – £55 000
2. Global account manager – £33 500
3. Partner – £30 000
4. Chief operating officer – £30 000
5. Chief financial officer – £30 000
6. Kitchen designer – £26 500
7. Chief technology officer – £25 000
8. Chief executive officer – £25 000
9. Channel manager – £25 000
10. Business development consultant – £23 500
What are the benefits of bonuses?
A year-end bonus is a good way to keep talented staff as it makes them feel valued, respected, and appreciated. It is also a good way to thank employees for the hard work they have done throughout the year, and is a gesture that will show employees how much you recognise and respect their efforts.
Finding and retaining top talent is a tough feat for employers, so you need to be prepared to go the extra mile to keep the talent you do have. In fact, 48 per cent of UK employers predicted not being able to hire suitable candidates to fill permanent positions in 2017, while according to CV Squad, 72 per cent of businesses cite problems attracting skilled employees. That said, an annual bonus can not only lift spirits but also give staff a reason to stay at your company.
Improve levels of motivation
Holiday or year-end bonuses or monetary gifts can be used as a tool to motivate staff and propel them to achieve specific goals, meet targets or complete projects. These can act can important motivators that can benefit both the staff and the business as a whole.
What companies need to be aware of when gifting holiday bonuses
While a bonus is usually given by the discretion of a company, some restrictions still apply when handing it out at the office:
There will likely be tax implications associated with holidays bonuses in the workplace. Bonuses are not as simple as merely handing over a gift. Bonuses are taxable, just as any other payment would be.
There may be policies put in place by your company regarding bonuses and gifts, so it is best to be aware of these policies before making promises to your team.
Bonuses can be a point of contention among staff members, especially if they feel they have been treated unfairly. Therefore, it’s crucial to be fair when handing out bonuses or gifts or you could end up with some conflict in the workplace.
If you are distributing bonuses to some staff and not others, you need to be prepared to answer any questions, while the amount you are dishing out to certain individuals may also come into question.
Are there holiday bonus guidelines?
Generally, the size of the bonus depends on the employee. Employees who make more money, have been at the company the longest, spend more time at the office or who play a fundamental role in the company will normally receive a more generous bonus than others.
This does not mean that lower earning or new employees do not deserve a bonus, therefore an employer should consider the amount of time and effort an employee puts into their role. Employers can distribute bonuses randomly if the company can afford it, or the amount of the bonus can be specified by contract. It is also important that employers not let personal opinions influence the decision and that all staff receives a bonus relative to their role at the company.
How much to give your employees as a bonus remains a tricky question, but what should be noted is that it should be meaningful to your staff. In addition, the amount must be fair on the employee and manageable for the business. The amount being paid as a bonus should be relative to the employee’s earnings and role within the company.
Bonuses can be structured according to:
Percentage of salary
A flat rate payment (e.g. a full month’s salary/13th cheque)
Percentage of new sales, expectations, or gross profit to a salesperson
Percentage of company profit
Bonuses can be a controversial topic – on the one hand, these are a way for average paid workers to earn a decent living, while on the other, some employees are being awarded despite below standard performances. If possible, be sure to include everyone working for the company in your bonus scheme, while companies that cannot afford to give cash or gift bonuses should consider giving the gift of time, which gives employees additional paid time off to spend with friends and family.