The work bonus has been around a long time, over a century in fact, so could it be outdated for today’s average employee? Bonuses were meant to improve productivity and enhance compensation, but do they really? It may be time for employers to unshackle their employees, or for employees to ask to be ‘unbonused’ because: missing a bonus can cause serious financial hardship for the average Canadian, and the resulting stress seriously undermines the financial literacy many companies offer their employees through benefit plans and employee assistance programs.
Missing a bonus can cause financial stress
Most people manage regular fixed costs okay but get thrown off by unpredictable expenses, and the opposite is true as well. They manage regular fixed salaries okay, but can be knocked off balance with unpredictable bonus compensation. Imagine if someone was living paycheque-to-paycheque, as 60% of Canadians do, and then missed an entire paycheque? Worse, what if they missed three? That’s what missing a bonus could feel like, considering the fact that the average bonus accounts for 11% of the recipient’s annual income (Conference Board of Canada).
Next, suppose that they were counting on that money for a major expense, or to pay off a major purchase? The interest alone on a $5,000 ‘don’t-pay-a-cent-event’ credit card could cost them $120 a month and that could be enough to throw them into a debt spiral.
Missing a bonus is supposed to be a motivator, but the stress it causes is known to kill productivity.
As it is, 39% of employees report ‘thinking about their debt levels and stressing out about it multiple times a day’ (Pollara), and the top 3 drivers of excessive stress are related to finances. These contributed to absenteeism rising to 2.4% of national payroll expenses (Conference Board of Canada). Even those employees experiencing financial distress that make it into work, they will spend as much as 13% of their workday dealing with their money problems (Federal Task Force on Financial Literacy).
Financial distress undermines EAP financial counselling
Truly, employers might be better to ‘unbonus’ their staff, increase salaries, provide good benefits that include financial education, and articulate clearly defined career paths. In addition, employers should motivate employees with basic human rewards, like talking to them, coaching them when they’re behind, cheering them on when they’re ahead, and giving non-financial awards for doing their jobs particularly well.
Consider this: when Google wanted to increase the value of their bonuses in 2011, they discovered that their employees preferred more reliable compensation. As a result, they gave every employee in the company a 10% increase in base pay that actually achieved both objectives: employees had higher reliable compensation and bonuses were more valuable because they were tied to salaries.