In this week’s episode of the One Step Better podcast, Mike and Matt discuss the idea of motivating your employees with money. Hiring has never been harder, and several employers are offering a sign-on bonus to encourage people to apply.
Roles offering sign-on bonuses increased by a whopping 454% amid staff shortages.(Global Data)
As a business owner, you want to hire employees who want to be more than just an employee. You want to hire a team player who is excited to contribute their talents and elevate their work culture.
But in reality, it’s difficult to find people who want to be a part of your mission and vision. Sometimes, offering sign-on bonuses or cash can motivate people to join your team.
In this article, Matt and Mike discuss the merit of cash in the workplace and offer four alternatives to boosting motivation among your employees.
The Pros and Cons of Cash Bonuses
If you’re paying your team a reasonable wage, whether that’s at fair market value or a little bit below or above, do additional dollars really motivate them? For example, offering a $1,000 sign-on bonus after they’ve stayed for six months.
But are you attracting top talent by offering cash? How does it make your existing employees feel?
“Employers look to a sign-on bonus as a quick fix, then that quick fix hurts because it does not yield a long-term hire. And the cost of turnover is much higher than the cost of hire.”Source
Several HR studies indicate that sign-on bonuses do not entice the best candidates to apply for the job. Additionally, everyone, new and long-term employees, should have the opportunity to reap the rewards of their hard work – not just new people that you’ve hired in a crunch.
But you’re short-staffed. Your team is picking up extra shifts, customers are irritated they have to wait, and you’re stressed out trying to hire help. Offering a sign-on bonus may help you get more people in the door.
Instead of slapping a bandaid on a serious wound, address the injury. Where are you hurting in your culture? Why are you short-staffed in the first place? How can you attract great employees to work for you and better your business?
If you write a stellar job description and offer long-term benefits and rewards, quality candidates will apply and want to work for you, and in return, better your reputation as a business and give you peace of mind.
Let’s dive into the four alternatives to offering a sign-on bonus.
1. Encourage fun competition.
The older demographic in your company cares more about cash, while the younger cares about insurance benefits, PTO, and advancement opportunities. You can compromise by encouraging fun competition in the office for bonuses and rewards.
For example, we hand out $100 to new employees during our quarterly meetings if they know our values by heart. Currently, we’re participating in a health challenge with a cash price for the winner.
The fun competition encourages employee productivity, engagement, and a team-first mentality.
2. Publicly praise your employees.
Praising in public goes a long way. We shout out employees who have worked hard, completed projects, or exemplified our values. We want to celebrate the wins.
An employee who has been recognized is 63% more likely to stay at his or her current job within the next three to six months.(Source)
As leaders, we’re in a war for talent right now. We want to retain our best people. We want to make sure they’re feeling like they’re part of something special and that we reward them for their efforts.
“If you’re out there struggling to find people, I would encourage you to look at your culture.”
3. Buy gifts.
Maybe I’m weird, but I’ve never been a big fan of Christmas lists. I like being surprised. Someone saw this item and thought of me. That’s way more special than asking for a specific item.
At Whirks, we celebrate Christmas with a high-stakes, dirty Santa gift exchange. Airline gift cards, Grizzlies tickets, kitchen appliances, and more await you (and yes, you can steal).
This requires our company to show up for the party, hang out with coworkers, and go home with an awesome gift.
Cash bonuses for Christmas are great – but if they fluctuate over the years, it can cause employee frustration. As a leader, once you’ve given a certain amount, your team is going to expect it.
If you choose to do a cash bonus, it’s important to communicate if that number is going to change and explain why. Being sporadically generous, whether it’s at Christmas or to reward excellent performance, unintentionally creates a rhythm. When it’s missed, your team notices.
4. Offer retirement plans.
My favorite non-cash way to motivate people is retirement plans. If you’re an employer with a younger workforce, you have the opportunity to make millionaires out of your team by offering retirement plans that have an employer-related contribution.
You’re telling your team that you care about their future, their financial freedom, and their families. If they invest their time into your company, you’ll invest in their development and in their future.
5. Send handwritten notes.
In a previous job of mine, anytime there was travel involved, my boss wrote a letter to my spouse saying that they appreciated me and what I was doing. It was an acknowledgment of knowing that travel isn’t easy – not just for you, but for your family, too.
Former CEO of Campbell Soup, Douglas Conant, wrote 30,000 personal notes to employees – on a daily basis. His reason? “Staying close to home will take you a long way. Then you take care of your business and smartly go to where consumers of the future are or will be.”Source
For small and mid-size business owners, occasionally handwriting letters to your employees is completely within the scope of reason. The time you take out of your day reaps the reward of a happier team and blossoming culture.
69% say they would work harder if they felt their efforts were better recognized.Source
A little more motivation creates a little more action.
It’s important to understand that cash is great. Cash does make people happy. But if you’re not paying a reasonable wage in the first place, if you don’t care about your company culture, it’s a vain endeavor.
This is why knowing your team, having a plan for them, and finding out what motivates them is so important. Offering 401ks, sending handwritten cards, and simply understanding their needs as human beings help you retain great employees and motivate them to keep working for you.
As soon as the leadership of a company is doing that, your managers will follow suit, and then your lower-level employees. It lifts up your entire workplace culture.