Big Bucks Only For The Best: Should You Use Only Merit-Based Bonuses?

Tip jars are suddenly everywhere – bathrooms, coffee shops, gift shops, the car rental desk, my local Subway store, and just when I got the app figured out now UBER wants a tip, too. Honestly, I’m not writing this to sound cheap – on the contrary – I’m actually talking about the concept of bonuses.

A tip is a sort of bonus, right? Some are customary and some tips are certainly earned. As a business owner or manager, how are employee bonuses working for you? Has offering a bonus just for bonus’ sake become something that is taken for granted? Are you seeing an uptick in performance with the bonuses you give?

“You’re Probably Not Going to Get a Raise Next Year”

The quote above is not what employees want to hear, but according to research firm Aon Hewitt, there is a trend among progressive companies to shift from across the board bonuses to bonuses only for high performers. “Businesses are planning to keep budgets for raises relatively flat in 2018, while continuing to devote more payroll dollars to performance-based pay, according to a survey of salary planning at 1,062 organizations conducted by consulting firm, Aon Hewitt,” writes Wall Street Journal (WSJ) reporter, John Simons.

If merit-only bonuses are gaining steam among bigger firms, how are they doing it? Simons reported the following stats from the Aon Hewitt study:

  • Two-thirds of those surveyed plan to use merit-based pay to prove a point about who is doing well and who needs to improve
  • 40 % of those have or are considering eliminating raises for low performers
  • 15% of companies surveyed also plan to ‘set more aggressive targets for bonuses and incentive pay’
Performance has never been as important as it is today in terms of managing costs, safety, and operational efficiency. Maybe its time to review your compensation structure. Read more at

ACT Like a Pro out there!

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