Bonuses Don’t Matter Unless People Feel Proud About Them

Companies offering a share of their profits to employees is old news. Many organizations pool a percentage of their profits and divide them between employees as year-end incentives. However, there is a lack of clarity on why certain employees receive certain levels of incentives. Nothing about the incentive received through the profit-sharing model is personal. And when it isn’t personal, people find it difficult to feel motivated to go over and beyond their routine responsibilities.

On the flip side, when companies choose to help employees align their self-interests with that of the company; when managers regularly follow-up with their team members and help them achieve the goals they set for themselves; and when the leadership recognizes and rewards people for achieving those goals, it makes employees feel personally connected with the success of the company.

Reward Results To Motivate, Strategize And Thrive

When employees understand company financial data and figure out ways in which they can individually impact the bottom line, it creates a win-win situation for everybody involved. And, of course, the strategic benefits for the company cannot be ignored either. When employees feel confident enough to place their bets on their employer succeeding, the management can negotiate to minimize its expenses on fixed salary payments by offering bigger bonuses.

Also, companies can retain their agility during crises; avoid having to lay off people to lose some of the financial burden during downtimes; and keep the churn rate to a minimum. Simply put, rewarding people for their results is the best way to create a consistently successful company.

When companies expect employees to join their efforts to overcome crises, they should also be willing to share their profit abundance when times are good. Doing so makes it possible to sustain the motivation of employees to perform their roles to the best of their abilities - irrespective of the business context.

It helps them feel more connected and engaged with the company by enhancing their sense of ownership. It drives people to go over and beyond their routine responsibilities and act in ways that positively impact their bonuses as well as the organization’s performance.

Face Crises With The Agility Of Lower Fixed Salaries

It’s also a strategic decision that can benefit the company: Raising the variable salaries automatically minimizes the burden caused by fixed salaries, which have a great impact on company expenses within the profit and loss structure.

When a company is hit by crisis, very often the first move is to lay off people to reduce the financial burden. Since it’s very complicated to reduce fixed salaries most companies choose to lose well-developed talent to overcome the crisis at hand.

However, by increasing variable pay instead of fixed pay, companies can remain agile and flexible in times of crises because the impact on expenses isn’t very high. Also, a lot of money and time can be saved in the future as there won’t be any need to recruit and train new people when the situation improves.

When Employees Bet On The Company Everyone Wins

Paulo Rogerio Ogeia, who works in the Costs Department at Semco, is someone who regularly placed his bets on the company’s performance and received massive incentives as a result. Of course, there were a few years, here and there, when the bonus he received was smaller because the business was                                                                                                    going through tough times.

However, he knew that the smaller bonus check wasn’t a reflection of his performance or that of his colleagues. Instead, it was a result of market-induced crises the company faced. Most of the years he opted for a hike in variable pay over a hike in fixed pay, Paulo says he took home massive bonus checks. They were amazing surprises that came at the end of the year and were always greater than what he expected.

His bonuses were like unexpected savings that he was able to realize because he believed in the company’s performance and placed his bets on it. He also adds that the bonuses were always bigger than any increases he might have gained through a bigger fixed salary. So, although there were some downtimes, he feels he made much more by trusting in Semco’s capacity to do well.

Share this article on social media