More than cash: These are the bonuses employees want
Employees who receive bonuses can rejoice — the practice of giving them out is safe for the coming year.
Around 83% of bonus-eligible professionals said they anticipate receiving a bonus this year, according to data collected by HR consulting firm Korn Ferry. The Los Angeles-based firm surveyed 100,000 professionals and executives across virtually every industry on the state of bonuses at their jobs. The survey's results are based on 756 responses.
“Over the last couple of years, I’ve heard senior executives say they’re willing to pay for performance if they get that performance,” says Tom McMullen, senior partner at Korn Ferry. “I think that mindset still prevails because it’s the most direct way to pay for performance.”
An overwhelming percentage of employees (90%) said their bonus depends on company performance. Employees were also optimistic about their earnings this year: 51% said they expected their bonus check to be bigger than the previous year.
“It’s a great way for companies to share their profits and gains, but when times are tough, you’re not on the hook in terms of fixed costs,” McMullen says.
While 71% of employees said their bonuses are given in cash, 21% report stock and 8% say 401(k) or other employer-provided defined contribution.
But company bonuses can go even further, Korn Ferry says.
When asked about other ways they’d like to receive a bonus besides cash, stock or 401(k), employees’ top answer (cited by 30% of workers surveyed) was a paid-for vacation. Flex time and additional time off came in at 20% and 18%, respectively. McMullen says workers wanting more time off is great news for employers because the reward isn’t too difficult to accommodate.
“Paid time off is not an incremental cost to an organization,” McMullen says. “If you can balance the workload while that person’s gone, it’s not a bad strategy for rewarding employees.”
McMullen says employers may be surprised to learn professional development opportunities also ranked high on the list of desired employee rewards. Roughly 21% of employees said they’d like more international assignments, and 11% said they’d like to be able to take sabbaticals. International assignments give employees the opportunity to expand their professional network and experience, something McMullen says is highly desirable in the business world.
“We find career development opportunities are the reason people either stay or leave a company,” McMullen says. “It tends to be among the most important retention tools.”
While the term “sabbatical” is more familiar in an academic setting, around 10-15% of companies use it as a retention tool, according to McMullen. College professors use it to take extended periods of time off from teaching to work on personal projects within their field of study. In the business community, the term usually refers to an extended vacation, but employees are certainly welcome to pursue personal interests — or nothing at all, McMullen says.
“Sabbaticals give employees time to relax and recharge. I think organizations struggling with ways to engage talent found sabbaticals can be an effective tool,” McMullen says. “The perceived value of the reward is much greater than the actual cost — it’s just additional time off.”
Whether your organization doles out cash or extended holidays, employees can be confident the practice isn’t going out of style.
“At a minimum, bonuses clarify what’s important for the organization and reinforces it by rewarding employees,” McMullen says.