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The Rewards Review - 2016
The document discusses the impact of employee bonuses and rewards on productivity, retention, and morale, emphasizing the importance of tailoring rewards to individual preferences. In the UK, bonus culture has grown, with over 10% of workers receiving Christmas bonuses, although many bonuses end up covering essential expenses rather than being seen as treats. The research stresses that companies could enhance their reward strategies by considering alternative forms of bonuses like gift cards, which align more closely with employee expectations and motivations.
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The Rewards Review - 2016
- 1. The Rewards Review December2016 www.one4allrewards.co.uk
- 2. Introduction Many employers arebeginning to recognise the impact that rewarding employees can have, not only on productivity but also staff retention rates and employee brand. But while thanking employees in a tangible way in the first place is a definite start, the truth is that the impact rewards and bonuses can have is heavily influenced by the way in which they are implemented. As experts in reward and engagement – both in the workplace and outside of it – we have used a survey of 1,002 UK employees across a wide range of industries and business sizes, to analyse how rewards and bonuses can be tailored to have maximum impact. Of course, if our past research has taught us anything, it is that the most effective way to reward is to tailor the scheme to the people who will be receiving it – your workforce – and here at One4all Rewards, this is our business. So for a truly nuclear bonus, get in touch with our representatives who will be more than happy to help you work out what is best for the people in your business. Declan Byrne, Managing Director at One4all Rewards
- 3. How Common AreBonuses in the UK? In 2016, more than 1 in 10 (14%) UK workers reports receiving a Christmas bonus from their employers – a slight decrease from 16% in 2015, although this is still dramatically above the 7% that received them in 2014. What this data suggests is that, in the past three years, bonus culture has been on the rise – perhaps because workers have become increasingly used to receiving them and companies have noticed the positive impact they have. However 2016 has seen bonuses dip slightly, perhaps due to this year’s economic instability. AGRI,FORESTRY&FISHING Financialservices INFO&COMMS education Manufacturing retail 5% 10% 15% 20% 25% 30% utilities LEisure Gov. BoDIES profession(law,accountant) healthcare transportation admin&support trades Which Industries are Awarding the Most Bonuses?
- 4. Which Sizes ofCompanies are Awarding the Most Bonuses? 5% 10% 15% 20% 25% 30% 35% 1-10 EMPLOYEES 11-50 EMPLOYEES 51-100 EMPLOYEES 101-250 EMPLOYEES 251-500 EMPLOYEES 501-1K EMPLOYEES 1K+ EMPLOYEES
- 5. Why Give Bonuses? Companiesthat hand out annual bonuses and rewards not only stand to benefit from improved employer brand and the opportunity to offer prospective employees more attractive packages – they can also go some way to reduce staff turnover, increase loyalty and improve morale. An overwhelming majority of British workers (83%) report that being thanked regularly by their employer – such as via bonuses or rewards - would make them feel more loyal to their employer. 1 in 4 (24%) claim they would be less inclined to be tempted away to another company if they were regularly thanked by their boss. And almost 1 in 3 said they would be “very unlikely” to leave a job where they were regularly shown appreciation – which is particularly interesting for those companies that are looking to time their bonuses at the end of the year, ahead of what is the most popular time of the year to change jobs (Glassdoor, January 2016.) What Kinds of Bonuses Are Being Awarded? Most commonly, bonuses are given as cash sums (26%), with the average value of cash-based bonuses being awarded by UK employers currently totaling £365. More than 1 in 10 (11%) workers reports receiving gift cards or vouchers, suggesting many bosses are looking to make sure their staff rewards are being used in the spirit in which they are intended: as a treat, rather than a top up to wages that could be used on everyday expenses, such as bills. Just 7% of bosses are taking the time to gift workers with something personal to them. Hampers (3.39%) were uncommon, and while a festive bottle of wine was once quite commonplace in UK workforces, just 3% of workers claims to receive alcohol at Christmas as a gesture from their boss – positive development, considering the problems the gift of alcohol can cause in an inclusive bonus scheme.
- 6. The Festive ThankYou is Best Traditionally, bonuses have been handed out at Christmas to express seasonal thanks and goodwill to employees for their efforts throughout the calendar year. So it’s no surprise that the research shows that the majority of workers prefer to receive their annual bonus in the build up to Christmas. Mid-December was UK employees’ preferred time to receive a bonus, with 1 in 3 (32%) specifying that this was best for them as it allowed them to top up their Christmas spending. Don’t Underestimate the Not So Festive Bonus While December is a good time to take stock of who in the company has worked hard and made valuable contributions to the business, the research shows that some employees would actually welcome a less festively-timed reward. The second most popular time to receive a bonus was actually mid- way through the year. Happily, for those companies whose year end falls in April, or whose quarter four is quieter, this could make more financial sense. However, the Christmas shoulder season (spanning November – January) was unanimously the most popular. 24% said receiving their bonus in November would be best for them, as they prepared for Christmas. Interestingly, 18% of workers admitted that a Christmas bonus in January would be their preference, suggesting receiving a reward from their boss in immediate aftermath of the holiday season would raise spirits. What Kinds of Bonuses Are Being Awarded? 5%10%15%20%25% BEER& WINE HAMPER PERSONAL GIFT GIFTVOUCHERS& GIFTCARDS CASH
- 7. One Big BonusOr Several Smaller Ones? 67% admitted receiving their bonus in one lump sum would make them work the hardest. Just 18% said they would be the most motivated by a bonus split into several staggered payments. And 16% were most significantly inspired to work harder by receiving it in two split sums. When Do Workers Prefer to Receive Their Bonuses? 30% 35%25%20%15%10% INMID-DECEMBERASANEXTRATOP-UP TOCHRISTMASSPENDING HALFWAYTHROUGHTHEYEAR, E.G:APRIL INNOVEMBERTOHELPINTHE BUILDUPTOCHRISTMAS INJANUARYTOHELP PAYOFDEBtSANDGET TOJANPAYDAY
- 8. What To Give? Workersoverwhelmingly feel bonuses with a clear cash value (such as money, gift cards or vouchers) have the biggest impact on their productivity and happiness at work (69%), with only a slim majority saying the same for gifts chosen according to their individual tastes and interests (7%), food hampers (3%) and alcohol such as bottles of wine/spirits (1%). Thankfully, in order to motivate, these types of monetary rewards needn’t be worth thousands of pounds, as the mean minimum value that workers felt bonuses would have to be worth, in order to result in them working harder, was £686. Interestingly, this amount is almost double the average value of bonuses currently being given to UK workers (£365), suggesting many companies around the UK are not investing enough in order to see significant increases in productivity. Which Types of Rewards Are the Most Motivating? 10%20%30%40%50%60%70%80% hamper alcohol Wine,beer,spirits personalgift formytastes money-basedbonus eg:giftcards,giftvouchers,cash
- 9. How To DecideWho Gets What The way bonus values are calculated is also key and, as our previous research has shown, one-size-fits-all thinking does not work when applied to deciding the size or value of bonuses. Indeed, workers were least motivated by rewards sized according to their team’s contribution to the company (9%) and were unenthusiastic about everyone in the workforce receiving the same bonus (11%). Employees instead prefer for bonuses to be scaled according to their individual achievements and contributions to the company (16%). Monetary Bonuses: A Privilege But Not a Treat Despite their best intentions, the research shows that a lot of the bonuses handed out to staff in the past 12 months by UK businesses actually ended up going on practical or essential items, rather than treats for the employees’ hard work. The top ten ways workers spent their bonuses in the past 12 months were dominated by practical or essential applications – such as adding to savings (1st), paying bills (6th), paying off debt (5th) or day to day living expenses (7th). And these weren’t uses which spread out over the following 12 months – indeed 1 in 5 (21%) claim they spent theirs within weeks of receiving it, suggesting that, for some, this was simply a case of getting through the month.
- 10. How Are BonusesActually Being Used? charity donations homeimprovement something i’vealready bought:caretc aholidayorspabreakforme aneveningorseveralevenings outwithlovedones nothing-iputitintomysavingsaccount 2% 4% 6% 8% 10% 12% 14% 16% 18% anitemofclothing orfashionaccessoryforme daytodaylivingexpensesbutnotbills agiftorgiftsfor familymembersorfriends bills:household,school,universityfeesetc payingoffdebt anelectricalitemforme, eg:tv,tablet,smartphoneetc.
- 11. Monetary Bonuses: WishfulThinking Interestingly, this isn’t actually the way that workers intended to spend their bonuses. The results show that more significant numbers were intending to spend it on treats for themselves – such as holidays (2nd), electrical items such as TVs, tablets, etc (3rd), an item they were already saving for (4th) or an evening or several evenings out (5th) – suggesting that often when bonuses are used for essentials or bill payments, it is unplanned. Although happily, those who did choose to spend their bonus on a treat for themselves most commonly opted to invest in a larger, more trophy-like item, such as a holiday (2nd) or an electrical gadget like a TV or a tablet (4th). Multi-retailer gift cards, such as the One4all Gift Card, are an excellent alternative to cash bonuses. They can be used to ensure that bonuses are enjoyed by the individual and used to purchase something as a gift or a treat for themselves, rather than being spent on bills or similar.
- 12. How Do WorkersIntend to Use Their Bonuses? charity donations anexpensiveitemiwasalready savingformyself somethingi’vealready bought:caretc anelectricalitemforme, eg:tv,tablet,smartphoneetc. anitemofclothing orfashionaccessoryforme aholidayorspabreakforme nothing-iputitintomysavingsaccount 1% 2% 3% 4% 5% 6% 7% 8% 9% bills:household,school, universityfeesetc daytodaylivingexpensesbutnotbills agiftorgiftsfor familymembersorfriends payingoffdebt homeimprovement aneveningorseveral eveningsoutwithlovedones
- 13. Communicating Bonuses Deciding howto communicate bonuses to workers is just as important to ensuring a bonus scheme is successful and effective as deciding what to give. If they are communicated in the wrong way, what can be a sizeable investment for the company can end up having little impact. The research shows that few are concerned with being personally handed their bonus by their manager (13%) or MD (9%). But, while potentially problematic, bosses being transparent about the size or type of bonus being received by all of the employees in the company was key for 1 in 5 (20%) workers. However, in companies where bonus sizes vary, many employers will feel that divulging the exact bonus value that every worker receives could have a negative effect – and actually cause rifts and rows amongst the workforce. So this level of transparency about the variations in bonuses is best saved for schemes where all workers will receive an equal sum, or those where different departments and teams receive items or activities as rewards, which have a less immediately obvious cash value.
- 14. Conclusion The number ofemployees receiving annual rewards has increased significantly in the UK in the last three years, as businesses increasingly recognise the impact they can have not only on morale and productivity but staff retention and employer brands. The data tells us that while the idea of a single, annual reward delivered at Christmas time is still the most effective way to implement bonuses, many businesses are not using them to their full effect. The value of the average annual bonus received by employees in the UK is almost half the amount the same workers say would motivate them to work harder. And while many bosses intend the annual bonus to be used by dedicated workers to use to treat themselves, many seem to be using it to ‘top up’ their income at a time of year when money is tight. Disappointingly, the majority of the top 10 ways workers currently spend their bonuses in 2016 is dominated by practical applications – such as paying for bills, putting into savings, clearing debt and day to day living expenses. Alternatives to the annual cash injection into the pay packet, such as gift cards or vouchers, are a great way to ensure workers’ hard earned bonuses are being used in the spirit in which they are intended, which will still satisfy workers’ preferences for rewards with clear cash values.