Employers offering more one-time bonuses, fewer annual raises

PROVIDENCE, R.I. (WPRI) — Many employers are opting to give out cash bonuses to their employees rather than increasing annual salaries, experts say. These one-time bonus compensations have been on the rise since the recession began, and even though the economy is improving, the trend is not slowing down.

When Senior Publicist Emily Sidley got her first performance bonus instead of an annual salary raise, she understood it was because of the shaky economy.

“I knew money was tight,” she said, “so the fact that I received a bonus made me feel appreciated and valued.”

But now, even in good times, she says her boss has continued to reward her with an extra infusion of cash.

“It makes me feel like they haven’t forgotten about me and I can help celebrate in the company’s success,” Sidley said.

Spot bonuses like these have increased in popularity over the last five years, according to the Society for Human Resource Management’s Viki Salemi.

“The trend is that employers are giving more and more bonuses more frequently and pulling back on the annual salary increase,” Salemi said.

It’s not limited to Sidley’s field, either. “It’s going across a variety of industries like healthcare, agriculture, education, nonprofits, and it’s not only at the upper management level either,” Salemi said. “It’s all different levels within the organization.”

Experts say one-time bonuses or other forms of variable compensation like gift cards or perks, are a way to give companies more financial flexibility than committing to a salary increase.These bonuses can help motivate employees, when implemented correctly.

“They can be very effective, not only at driving behavior but in terms of rewarding the results and recognizing the good job that our employees are doing,” said Stephanie Thomas of the Institute for Compensation Studies. However, experts also point out that one-time bonuses don’t compound over time like salary increases do, and a lower base salary can affect things like retirement benefits or a mortgage application.

Thomas says she believes that the days of large salary increases year after year are a thing of the past, and predicts that we’ll continue to see an evolution of the mix between smaller salary increases and bonuses or other variable pay.

Comments are closed.