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APS Partners with Software Advice to Discuss
Bonus Structures

Which Bonus Structure is Best for Your Company?

Software Advice, a company that hosts online reviews of payroll software, conducted a survey of 200 full-time employees and asked how their employer’s bonus structure compared with what they actually want. Based on the survey’s key findings, APS partnered with Software Advice and provided valuable insight into how workforce management software can help with bonus administration.

The survey uncovered four key findings:

70 percent of workers prefer bonuses tied to individual performance over those tied to department or company performance, or not tied to performance at all.

To promote motivation and retention among your best workers, rewarding bonuses based on individual performance is best.

Preferred Bonus Type

Even if you can’t afford a complex system, such as the ones for compensation management, an integrated HR suite can still aid in your bonus efforts.

73 percent of workers would prefer to make a percentage of their performance-based bonus for hitting a percentage of their goal.

Set multiple performance goals for each employee, and reward them a percentage of their bonus for hitting a percentage of their goal.

This way, you can promote continuous effort among your employees without seeming unfair. It’s a small consideration, but one that is often overlooked.

63 percent prefer spot bonuses for special effort over retention, signing or employee referral bonuses.

Spot bonuses are often up to managers’ discretion, and limited to small amounts ranging from $25 to $500 - but they’re a great way to reward and acknowledge special effort by employees.

Preferred one-time bonus

With a modern payroll system, managing spot-bonus budgets and allocation is simple.

54 percent prefer smaller monthly bonuses, while 46 percent prefer a larger annual award.

When deciding what timeline to follow at your organization, ask your employees what they prefer through a random survey.

You may decide to have different bonus timelines for different jobs. If that’s the case, you can use your payroll software to set up various timelines, then link them with your accounting general ledger to keep things organized.

“When we set out to do this report, the hypothesis was that workers would want their bonuses structured differently depending on what type of worker they were,” says Brian Westfall of Software Advice, a company that hosts online reviews of payroll software. “Surely a high-level executive would be more interested in getting a bonus tied to company performance, something they more directly influence, than a rank-and-file worker.

But when the results came back, we were surprised. Regardless of age, gender, industry, department or management level, workers want their bonus as closely tied to their individual performance and contribution as possible.

This, of course, comes with a significant administrative burden. But not only can the right HR suite—with integrated capabilities for performance management and payroll—ensure that proper processes are put in place to accurately and effectively measure individual contribution, but it can also allow for clear communication between managers, HR and accounting to administer performance-based bonuses error-free.

Use Software to Handle Your Performance-Based Bonuses

Having a core HR suite with integrated payroll and performance management capabilities can help facilitate communication between departments—which is necessary when doing performance-based bonuses.

“Managers are doing the reviews and making their recommendations to HR, and then HR … makes the pay rate change, [commits] it to the record and [runs] it through payroll,” says Christian Valiulis, chief revenue officer at APS. “Having an integrated system facilitates that communication and collaboration between employees, managers and HR.

Manager adding bonus in APS

Managers can recommend bonus amounts to HR in APS

It can be challenging to administer these types of bonuses, but it’s a worthwhile endeavor. By rewarding your employees based on their individual performances, you’re motivating them to be more productive and efficient while fostering a healthy and happy work environment.

For more information on Software Advice’s key findings, additional tips on how to choose the best bonus structure for your company, and how the right workforce management solution can help, read the entire survey.

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