Can paying a bonus fix business problems?
No, but it can buy you some time while you fix the real problem.
Let’s say you wake up and you realize “this company would be in big trouble without Joe”. We all know these employees that can make or break you. How do you change this? First, ask yourself “Why would Joe leaving be such a big deal?” Maybe…
- “Joe” has a “Hot” skill that is difficult (and expensive) to replace; a resignation would mean you can’t deliver to your customers for an extended period of time, and you’ll spend a fortune recruiting a replacement
- “Joe” is a top performer – you depend on him to get things done, solve tough problems or drive creative new ideas in ways no one else can
- “Joe” has strong networks with, or critical knowledge of, key industries, regions or stakeholders that you can’t afford to lose
- “Joe” has been around since day 1 and holds unique corporate or product knowledge that no one else has, and losing that knowledge would cripple your operation
You should immediately start working on a long term solution like training others and/or hiring someone else to close the gap.In the meantime, a bonus or premium might keep Joe happy and committed – a little extra security.
In the short term, consider these options:
Skills premiums: This option can be useful to address temporary supply and demand pressures for certain skills. Make sure the employee understands the temporary nature of this option, that it is market based, and will be reviewed regularly.
Milestone bonuses: Typically applied to a very specific person or group of people, to meet clear and specific project goals.
“Pay to Stay” bonuses: Retention bonuses are used very selectively, to encourage key talent to stay through a critical period. They can be used to ensure continuity through finite situations that might cause uncertainty. Examples include acquisitions or a substantial product transition.
Salary increase: It’s always an option, but be careful! If the issue is temporary, this approach could lock the organization into unnecessary long term salary costs.
Just remember to be clear and fair when you design these programs to make sure that they motivate and achieve what you want.
We leave you with this key takeaway – While money can help retain and motivate in the short term, it will never solve the problem on its own!
