December 21, 2021

What are Spot Bonuses?

Sam Caucci

Money

Employees who go above and beyond to provide excellent work should be rewarded for those efforts. Employers that want to reward their employees for exceptional work can give them on-the-spot bonuses, which help to encourage and motivate other employees to do the same. More and more organizations are implementing spot bonuses to help increase employee engagement, motivation, loyalty, and retention. 

What are spot bonuses?

A spot bonus is a “spontaneous incentive awarded to individuals for accomplishments not readily measured by a standard.” A spot bonus is commonly used to give out special recognition to an employee or reward employee performance that goes above and beyond. Almost all employees can be eligible to receive a spot bonus, however employees in top management are less likely to be eligible. 

Bonus rewards can range from something small like points that can be cashed out later, or they can be bigger like gift cards, monetary rewards or time off.

The Benefits of Giving Out Spot Bonuses

Spot bonuses are a great investment to make for your company, and you can enjoy the following benefits:

  • Helps show appreciation and recognition towards your employees for the extra effort they have put into their jobs, and this can translate to better employee retention.
  • Motivates employees to be more engaged so they will arrive to work on time, be more productive and enjoy their work. 
  • Boosts employee morale, which can result in better customer service, reviews and sales.

Plus, spot bonuses are a very low-cost initiative for many companies compared to base-pay increases or year-end bonuses. Spot bonuses typically amount to little more than 0.5 percent of total payroll, and usually even less than that at 0.25 percent. 

How to Build Your Own Spot Bonus Program

Companies that are looking to increase motivation and employee engagement while still being conscientious about costs can utilize programs like spot bonuses. Plus, it allows greater control of when and where rewards are being given out. For example, say you have a $5000 limit set aside for spot bonuses, maybe one year you go through it quickly, and other years you don’t. You shouldn’t feel obligated to use the funds if you have not seen results.

Here are some tips on building out and conducting your very own spot bonus program:

Only give out well-deserved rewards.

Rewards and incentives can help push your employees to truly commit to their goals, put in more effort, and want to further their accomplishments and knowledge. However, giving out rewards for every little accomplishment can cause your employees to expect something every time they do something right. This can result in a loss of motivation if they think their employer is not recognizing their efforts. This means you should only use a spot bonus reward plan to help show recognition and appreciation for behaviors and actions that you want to promote more of. You can use spot bonuses to encourage rather than just to reward past achievements. 

Try to use spot bonuses sparingly, so they are not your employees’ only motivation. Your employee should be able to find their jobs motivating without constant incentive or reward.

Consistency is key.

Spot bonuses are very effective when they are rewarding defined behaviors. It helps to create a guide that includes various factors or criteria that you apply to when giving out your spot rewards. This can help you show your employees that you have consistency in your bonus decisions. This helps you reward employees for achieving some similar goals and makes sure that you base your rewards on positive behavior instead of just your mood or perceived biases.

Reward immediately.

Rewards are more effective when they are given to employees immediately after they have earned them, rather than waiting for a specified time or a more convenient time. Receiving immediate rewards is much more motivating than the ones that employees receive a long time after they have accomplished a goal.

Stay neutral.

Even if you have star performers or some employees who always outperform others, you should resist showing favoritism among your employees. Removing this bias from your bonus decisions will help you maintain good morale and a sense of teamwork in the workplace. If you have top performers on your team, you can show them appreciation without constantly giving them spot bonuses. Consider raising their pay instead. Giving out spot bonuses to a variety of employees will show that anyone can do well on the job and that you will always recognize and reward outstanding effort, no matter who it is. 

Level Up Your Team With 1Huddle

1Huddle can help you and your team stay ahead of the learning curve. We offer cloud-based employee gamification software. You can customize your content for a seamless experience and all of your employees will be able to access their training anywhere, anytime and at the push of a button. You can use our game platform to measure their performance and make key decisions on where you should take your gamification strategy next. 

Do you want to learn more about how 1Huddle can help you level up your own workforce? Leave your information on the Talk To Us Page and schedule a call.

Sam Caucci, Founder & CEO at 1Huddle

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