My small company had a wild year 4 years ago. That year, we handed out bonuses that were approximately 8x the norm for previous years and took the rest of the profits and did some major reinvesting. Move into our first building, bought a few new vehicles, new trailers, and new equipment. We restructured our crews so that we could chase larger commercial jobs. We have been focusing as much as possible on the larger jobs and the wild year immediately became the norm for us for the following 3 years with steady moderate increases YOY since.
We have increased our base pay rate for all employees and we have kept bonuses as high(percentage)as that first big year.
My thought is that the bonuses are better than drastic increases in base rate incase we have a downturn. Now that our pivot has taken a solid root, I am wondering if I should reevaluate the bonus vs base pay.
I want to maximize my employee morale as far as money goes. I can talk myself into both ideas of a bonus or raise doing that the best.
What is everyone’s thoughts on large bonuses vs raises?
We already have a 401 with a good match, offer contributions toward health insurance, and 2-3 weeks paid vacation. I would like to pay 100% health insurance, but also can see how some folks might rather the money.
In my experience, my staff loved getting a bonus. I usually gave them between summer and fall months so it always came as a big surprise.
However, over the course of the year, some people developed some “anxiety” over never seeing their base pay on their check increase.
One woman actually gave her notice because she felt that by her salary not increasing she wasn’t being rewarded for her work. So after years with my company, she gave me a generous 5 weeks notice.
A funny thing happened. She approached me after 3 weeks to see If I hired her replacement yet. When I asked her why, she asked if she could have her job back. She found out that her pay was higher with us, got paid holidays, vacation & bonus.
I think the better solution for the employee from a perception aspect, is a mix of base pay increase + bonus.
Increased pay recognizes them specifically for their work. Bonus is perceived as the company saying thank you to their employees for help the company have a great year.