Do you want to reward your employees but don’t know the best way to divide bonuses between them? Having happy, loyal employees is essential for long-term business success.

That’s why it’s important to consider how bonuses can be used effectively – not only for individual employee recognition but also for overall team morale and productivity.

In this blog post, our experts here at Plentive will explore different strategies that you can use when determining how to allocate bonus payments among your workers.

Read on to find out more about this key aspect of staff incentives and motivation!

Before we get into the real details, let’s hit the brief.

To ensure bonuses are divided fairly between employees, make sure you have budgeted adequately, put criteria in place, determine the amount, monitor progress, communicate and payout, follow up, and evaluate. And always be transparent.

So with the mini answer in place, let’s start by finding out what an employee bonus is.

What is an employee bonus?

An employee bonus is a great way to reward employees for their hard work. It can be a monetary bonus, performance bonus, or something else entirely.

According to marketing gurus Statista, the most common type of employee bonus is an annual or bi-annual cash bonus.

Monetary bonuses are usually given to staff as a lump sum or other reward for doing a good job and reaching goals.

Performance bonuses may include promotions, extra vacation days, or payment based on exceptional performance relative to either individual or group targets.

Check here for the difference between a bonus and a commission.

Other types of bonuses could be something out of the ordinary like tickets to an event or restaurant gift cards as tokens of appreciation from employers.

When carefully implemented, employee bonuses acknowledge robust workplace contributions, making it easier for firms to attract and retain talented professionals.

So how do employers make sure these types of bonuses are distributed fairly?

Read on to discover more.

How to divide bonuses between employees

Before deciding how to divide bonuses between employees, the first step is for employers to budget for them.

When it comes to budgeting for staff bonuses, employers should think strategically. Bonuses can often go a long way in fostering a sense of appreciation between management and employees, motivating them to do their best.

When planning a bonus structure and budget, employers should first determine the type of bonus they want to provide, how much they will allocate to the program overall, and who should receive bonuses.

Employers may also want to consider various other forms of recognition such as awarding employee of the month or offering rewards for specific job performances.

Setting limits for bonuses is an important step too – employers may decide to adjust these limits when economic conditions change or performance goals must be met.

Regardless of what methods are chosen, thoughtful consideration regarding budgeting is key when managing any kind of incentive program.

7 key elements to divide bonuses between employees

1. Put criteria in place

Once employers are satisfied that the budget for bonuses is in place, one of the first steps in determining how to divide bonuses between employees is to set up criteria for employee performance or contributions made over the course of the year.

Employees discussing their new incentive plan

The key to distributing bonuses fairly is setting clear performance goals for employees prior to the beginning of any period for which bonuses are awarded.

These should be in line with what the employee does on a daily basis, as well as aligned with overall business goals.

It could include factors such as the number of years employed, sales figures, customer service ratings, attendance records, or any other form of measurable achievement. Often this is determined based on their department.

Also, make sure that each individual’s goals are measurable and achievable so they have something tangible to strive for.

This will help to ensure that bonuses are fairly divided based on consistent and trackable measures of success.

It’s also important to recognize that different employees will have varying levels of contribution and performance, and employers should take this into account when deciding how to divide bonuses.

This can involve complex calculations, or simply relying on the judgment of supervisors or team leads.

2. Whole team or individuals?

Once the criteria has been established, employers must decide whether they would like to award bonuses based on individual performance or across the whole team’s contributions.

If individual performance is more important, then bonuses can be awarded based on each employee’s performance relative to the criteria.

On the other hand, if team contributions are more important, employers could choose to divide a set amount of money evenly among all employees or, alternatively, allocate different amounts depending on how much each person contributed.

3. Determine the Amount

Once you have collected data on individual performance, it’s time to decide how much of a bonus each employee will receive.

This should be based on both their personal achievements as well as the overall success of the business for that period.

As such, bonuses can be divided up in many different ways, depending on what works best for your company’s hierarchy and structure.

4. Monitor Progress

It’s important to track progress against established benchmarks throughout the bonus period so you can accurately determine who has met their performance goals and deserves a bonus payout.

This could involve regular performance reviews and/or feedback from managers.

5. Communicate & Pay Out

Clearly communicate with employees regarding their performance bonuses so they know exactly what to expect when it comes time to distribute them.

A team communicating the potential of getting employee incentive plans

Also, make sure that payouts are handled promptly and accurately to ensure fairness and good morale among staff members! Having a system in place that is automated makes administrating an incentive program much easier to implement.

Finally, don’t forget to account for any applicable taxes when distributing bonuses.

6. Follow Up & Re-evaluate

After the bonus distribution process is complete, follow up with employees to make sure they are satisfied with the results and that everything was handled properly.

Additionally, go back over your bonus plan each year and adjust it as needed based on changes in the business or feedback from employees.

7. Show transparency

No matter which approach is chosen for distributing bonuses, it’s important for employers to ensure that their methods are transparent and fair.

By clearly communicating this information with employees before any awards are handed out, employers can avoid confusion and potential resentment from employees who feel like they may not have been fairly treated.

This will help keep morale high and make sure everyone feels positive about their workplace environment.

Why should employees distribute bonuses fairly?

By following these steps, employers can ensure that bonus distributions are fair, equitable, and well-received by their team members!

With a clear process in place, you’ll be able to reward hard work while also taking into consideration the overall success of your company.

An owner showing his team their live dashboard of their performance metrics.

When bonuses are distributed correctly, they can be an effective tool for employee motivation – both financially and mentally.

However, when not managed correctly, they can have adverse effects and cause tension among team members. That’s why having a clear plan in place is essential for success!

How to divide bonuses between employees 7 key elements – To conclude

Bonuses are an excellent way for employers to reward loyal staff members and incentivize hard work, but distributing them fairly is essential for creating a positive atmosphere within any workplace.

With careful consideration of individual performances as well as overall team achievement, employers can ensure that all employees feel rewarded for their contributions.

At Plentive, we can tailor employee incentives and business directly to your business needs.

With our powerful dashboard platform and unique incentive rules library, you can ensure that every member of your team is rewarded for their performance in the most meaningful way possible.

From individualized bonuses to department-wide or even company-wide recognition programs – there’s something sure to motivate everyone on your staff!

Plus, if you have any questions about how it all works or need more information? Reach out anytime and talk with one of our experienced representatives – or schedule a demo here.

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