Today, we’re going to talk about employee rewards. It’s always great when an employer is able to recognize an employee’s contributions. Whether you give a raise, bonus or non-monetary reward, you’re showing your employees that you appreciate their hard work.
While bonuses and raises are certainly popular and well-received, there are many other ways to show your appreciation. Be creative and consider options such as a catered lunch, paid time off or an employee party. Even the gesture of personally thanking employees for a job well done will go a long way toward keeping your team engaged and motivated.
There are, however, some guidelines for giving rewards. Even the best intentions can subject your company to liability if you’re not careful. Here are three important tips to keep in mind when offering rewards.
First, be careful. As an employer, you can generally decide whether or not to give employees a bonus or raise, but be careful about making any verbal or written commitments…even a casual mention of a bonus or raise could be construed as binding. And be sure to check with your accountant or a financial professional about the tax implications of any rewards you plan to give.
Next, be clear. The U.S. Small Business Administration, or SBA, suggests including your reward policy in your employee welcome kit or benefits package and reminding employees of your policy when performance review season comes around.
Finally, be objective. The SBA recommends establishing a clear grading system for assessing eligibility for a pay increase or other benefits. This can help you measure performance fairly and consistently. You should also document your reasons for making any award, and back it up with performance examples.
As you proceed, keep in mind that federal nondiscrimination laws apply to bonuses. This means that the eligibility criteria & amounts for bonuses must be nondiscriminatory. Additionally, states may have their own requirements, so be sure to review your state’s nondiscrimination laws.