Written by Christopher Smith and

For more details please contact us

For those that receive a bonus from their employer, whether it be for performance, length of service or an extra holiday payment such as a Christmas bonus, many employees are glad to receive extra remuneration for their hard work.

Only recently, Greggs announced that following a successful 2019 (with a recorded 13.5% increase in sales), staff will receive a bonus payment in addition to the business’ profit-sharing scheme. Staff employed by Greggs since before March 2019 will receive a £300 bonus in addition to their regular pay for the month of January, whilst staff joining after March 2019, will get £75 bonus for each quarter that they have been with the company. This poses the question of how do one-off bonus payments impact employees’ motivation?

Back in 2018, Pret a Manger announced that it would give all staff a £1,000 bonus on completion of their acquisition by Luxemburg-based JAB Holdings. At the time, Personnel Today floated the idea that an equal payment to all staff may demotivate those with longer service as they would receive the same amount as an individual who joined the company’s payroll a short time before the completion of the deal. Furthermore, it was suggested that such a one-off payment was not conducive to increasing motivation as those with a strong performance record who saw no difference in their bonus payments compared to those considered to be under-performers. The effect of this was the demoralisation of high-performers, whilst potentially instilling of a sense of complacency amongst under-performers. Arguably, rewards become most effective motivators when they are clearly and specifically tied to measures of performance. However, despite this the Managers and Professionals Salary Survey for 2018-19 found that across a sample of more than 250,000 employees, most bonuses (94.2%) were based on overall organisational performance.

One-off payments can, if well communicated and utilised sparingly, increase overall workforce satisfaction and improve the general sense of appreciation amongst staff, increasing motivation at least for the short-term. A heightened feeling amongst staff of being valued by their employer can beneficial in specific situations, during periods of change or challenge to the business.  An Improved sense of appreciation from employers will likely increase employees’ loyalty towards the company, thus lowering staff turnover. In a poll of 1,096 UK employees by gifting service One4all Rewards, nearly half of workers (46%) admitted that a bonus or gift from their manager had persuaded them to remain loyal. The power of small gestures by employers to their staff should not be underestimated as a factor in boosting morale and helping to avoid the costs associated with recruiting and training new employees.

Overall, where possible, employers should consider exploring the benefits associated with bonus payments and consider the potential budgetary expenditure associated with a rewards scheme. Indeed, the carefully managed bonus payments whether based on objectives or one-off payments, are likely to boost productivity and loyalty amongst the workforce, and the costs of these are likely to significantly outweigh those associated with high turnover.