Bonus Programs for Employees: Reward and Retain Top Performers

When your employees feel appreciated, they’re more likely to stick around. Bonuses are a way to show your gratitude and thank employees for their hard work, beyond their usual salary and employment benefits.

Offering these bonuses can be simple and rewarding, as long as you have an employee bonus program in place. This will keep your whole team on the same page—and keep them around for the long haul.

Let’s go through how to set a budget and goals, which types of employee bonuses to offer, and how to introduce the program to your team.

What is a bonus program for employees?

Employee bonus plans reward high performance with incentives like extra pay, time off, gifts, or other perks.

By creating a bonus system for employees, you can:

• Boost employee morale, productivity, and overall job satisfaction
• Keep all-star team members around long-term
• Motivate and encourage the type of behavior you want to see
• Show employees how they contribute to company goals

Spot bonuses

Spot bonuses are small thank-yous that you give on the spot to reward great work. These bonuses can come as surprises so your team always does their best work—but employees should know they’re always a possibility.

You can even empower employees to nominate each other for spot bonuses. This can be useful if your field teams don’t have direct supervision and hold each other accountable for the quality of their work.

💰 Example: Give an employee a $10 coffee shop gift card for their positive attitude during a stressful time.

Referral bonuses

You can award a referral bonus when a current employee refers a new hire as part of an employee referral program. This bonus can be any size, depending on how easy or hard it is to find qualified candidates.

Make sure to create rules and policies around the program. This helps you set expectations with employees, like how much they earn and when they’ll receive it.

💰 Example: Give the referring employee a set of movie tickets when the new hire reaches 30 days on the job, followed by an extra vacation day when the hire reaches 60 days.

Signing bonuses

If you’re hiring for a high-responsibility position or trying to attract someone you know will level up your business, you can offer a signing bonus to sweeten the deal.

As a small business, you’ll likely want to reserve signing bonuses for special hires and not use them all the time.

💰 Example: Offer an additional 10% of the annual salary as a signing bonus when hiring a new team lead.

Pro Tip: To help keep the new employee around for longer, spread out the bonus over a few months instead of paying it out all at once.

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Retention bonuses

Retention bonuses help keep your highest-performing employees around. You can use them to encourage long-term careers by giving bonuses at certain employment milestones, like a hiring anniversary.

Or, if your business is going through a major shift, like a merger or acquisition, you can offer your best employees a retention bonus to encourage them to ride out the change.

💰 Example: Give employees $100, $200, and $500 in cash for their one-, two-, and five-year anniversaries. If you’re going through change, offer a bonus of 10% of their annual salary, split into two payments—5% at the time you offer the bonus, and the remaining 5% at a later date.

Pro Tip: If you’re giving out retention bonuses at a future date, make sure the employee knows when they’ll get it—and put that date in writing. That way they know you’ll keep your promise.

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Profit sharing

After employees have been with your business for at least a year, give them a percentage of your quarterly or annual company profits. (Some companies also do this based on revenue, with a much smaller percentage.)

Show your team how their efforts affect your bottom line and help contribute to profits. This will motivate employees to work harder because their efforts will pay off—literally.

💰 Example: Distribute 15% of net profits among employees, adjusting based on their seniority, responsibilities, and performance.

Pro Tip: Make sure you have the funds available ahead of time so you aren’t scrambling when it’s time to share them with employees.

Tips

Employee tips are a special kind of bonus—they come from the client, not from you. When clients tip an employee, it’s a reward for a job well done.

Tips are usually optional, and the amount can vary. That said, businesses that use Jobber get tipped 15% on average.

💰 Example: A client tips your employee 10% of a job’s value for doing such great work.