βI’m laying out three measurable improvements I want people to make, and their bonus will be tied to that. We’re trying to use bonuses to teach them to be more productive and more beneficial to the company.β
Bonuses, Criner says, should be substantial enough each year for employees to see clearly how much progress they’re making. He learned the value of financial rewards after losing a key lead man who complained that Criner hadn’t raised his pay enough.
βI had become complacent,β Criner says. βIf you’re not being proactive about being as productive as possible and sharing that with your employees, you’re going to be on the short end.β
INDUSTRY STANDARD Criner and Malone both say that their comprehensive packages are industry standard in their markets.
βThis is pretty normal out here,β Malone says. βI want to do it because it’s the right thing to do, but I don’t think I could be competitive if I didn’t.β
Ultimately, that’s the function of a good benefit package: Performance-based bonuses, health insurance, time off, and company outings all serve to win employee loyalty and increase the rate of retention. Workers want benefits; if your competition offers them and you don’t, you’re going to have a hard time retaining talent.
Although wages and benefit payouts vary across markets and industries, human resources experts say companies with good retention rates generally spend between 35% and 45% of their payroll on benefits. If that sounds expensive, weigh the upfront costs of benefits against the far higher cost of finding and training good employees.
βYou really want to be looking at the bottom-line benefit, in that every time you hire a new employee it can cost two to three times an employee’s salary to get that employee up and running,β Krauer says. βYou have to consider the time lost to hiring: finding candidates, interviewing, training to bring the new person up to speed. There’s also the loss in productivity when the employee’s gone and while the new hire is being trained.β
Paul Fromstein, an economist at the Employee Benefits Research Institute, says two recent studies of small and large companies across a variety of industries found that managers whose companies offer benefits overwhelmingly report a positive return on the benefit investment.
βIt has an impact on the bottom line, whether it’s through production or recruitment and retention, or worker health status and absenteeism: The bottom line is [managers] think it’s worth the cost.β