Can't offer a bonus this year? Show employees you care in other ways

• Key Insight: Learn how shrinking bonus payouts are forcing firms to rethink employee-engagement strategies.
• What's at Stake: Employee disengagement risks productivity losses and higher turnover if alternatives aren't strategic.
• Supporting Data: Fewer than 40% of workers received bonuses in 2024; median dropped to $1,786.
• Source: Bullets generated by AI with editorial review

While bonuses may feel increasingly out of reach for many employees, the need to feel valued and recognized hasn't changed — and it's on leaders to ensure they feel appreciated. 

The share of workers receiving bonuses has been falling since 2021, according to recent data from employee benefits provider ADP. In fact, fewer than 40% of workers received a bonus in 2024. For those who do receive an end-of-year payout, the median amount has fallen to $1,786 in 2024 from $1,857 in 2023, according to ADP.  

Traditionally, bonuses were designed to reward employee performance and reinforce company culture. But as employers tighten their budgets, they'll need to find new ways to maintain motivation and increase engagement. 

Read more: This year, employees' benefits decisions are financial

"The pandemic ushered in a period of temporary labor shortages which likely contributed to the previous increase in bonus payouts, seeing as employers were competing to attract and retain workers," says Jeff Nezaj, senior principal data scientist with ADP Research. "But as these labor shortages subsided, so have bonuses."

It's understandable that the current economic climate may be what's standing in leaders' way of giving bonuses this year, Nezaj says. But  they should be as open as possible about their limitations and be prepared to make up the difference anywhere they can. 

"You do not want to blindside your employees but instead keep them informed and part of the conversation," Nezaj says. "While bonuses are hard to replace, maybe consider what you can offer your employees to show your appreciation." 

Nezaj urges leaders to think outside the box when it comes to alternatives. For example, if regular bonuses aren't possible, is there the budget to reserve them for holidays? If direct financial compensation is out of the question, there may be an employee benefit leaders can invest in the following year, or a skills development program they can roll out. Other efforts include employee discount programs or team events to bolster employee appreciation, Nezaj says. 

Read more: Why financial wellness should start with employees' paychecks

"Transparent communication is essential," he says. "Speak with your employees about how things like business performance and external factors might be impacting the ability to provide bonuses. Keeping employees satisfied and feeling valued is at the very foundation of every great business."

The preservation of workplace culture and engagement has never been more paramount than it is right now, and finding new ways to supplement monetary compensation can keep leaders focused on that goal, Nezaj says. 

"You should want work to be fun and collaborative," Nezaj says. "And employees that feel seen, heard and valued are more engaged and productive."