How To Use Cash Bonuses to the Greatest Effect

The subject of cash bonuses can be a prickly subject for many businesses.

On the one hand, they’re seen as a traditional and popular form of incentivisation – especially when it comes to sales of high-value items or target-based sales. And of course, who wouldn’t say no to a little more money in their lives!

On the other, they can be something of a de-motivator over time. This is especially true if employees become accustomed to receiving money for going above and beyond the call of duty, or if employees have difficulty reaching their personal or business-related targets.

Also, a bonus might boost productivity in the short-term, but can result in peaks and troughs over an extended period of time as opposed to more consistent performances.

Demotivation isn’t also the only negative factor when it comes to staff bonuses. A bonus scheme can also contribute to poor staff retention rates.

This is because those employees who may not be totally satisfied with their jobs and perhaps considering moving jobs might just wait to hand in their notice once they’ve received their annual or end-of-year bonus. So, not only will a business have just paid out a potentially sizeable amount of money, they’ll also potentially have to incur another costly expense of replacing those who’ve decided to take the money and run!

So, a tough topic for any business, but one that is often a necessity. Question is, if your business does rely on a bonus scheme, how can it be managed effectively and keep a workforce happy, productive and consistently motivated?


Now hang on just a sec: you might be thinking at this point why we’re writing about how to use bonuses to the greatest effect when we’re predominately in the business of reward and recognition, right?

Whilst we’re huge advocates of taking a more holistic approach to staff incentives and motivation, plus the mounting evidence that many organisations are beginning to re-evaluate the effectiveness of bonuses, we’re not blind to the fact that cash bonuses are still the ‘industry standard’ for a tremendous number of organisations – especially those in housing sales or the motor trade, for example.

Luckily, there are some very useful elements of reward and recognition which can be transplanted to help maintain the effectiveness of a more traditional cash bonus scheme:


It’s of paramount importance to set clear goals and criteria for a performance-related bonus scheme.

Ideally, you should set goals that tie-in with the overall objectives of your business and determine the different criteria that will be used to assess who receives a cash bonus. With this in mind, consider using SMART objectives as these will not only engage your employees by linking their performance to their own objectives, but also help them stay focused on driving success within your business.


A bonus scheme may be a contractual obligation to many staff in sales-based roles, but do the demographics of your workforce really engaging with it or is there something else that would motivate them better?

Cash bonuses may seem like the answer to boosting motivation and productivity, but in truth, they can be expensive, impersonal and for businesses needing to watch the pennies, potentially unsustainable long-term.

In addition, consider that our own research which found that 1-in-5 employees were more receptive to experiential rewards as opposed to cash. This is especially so when it comes to the Millennial & Gen Z generations, who are now making up a larger proportion of the workforce than ever before.


A bonus scheme isn’t a fire and forget exercise! Track your bonus programme results in relation to the SMART programme goals you set at the start of the process, and be prepared to adapt your scheme to the changing needs of your employees

As well as the statistical data you receive from your sales and finance teams, use surveys and focus groups to gather feedback as to whether the bonus scheme you offer is really having the desired effect, or have your staff become disengaged or unmotivated by it?

If money talks in your business, follow these key points, and you should be able to instigate and manage a bonus scheme effectively.

The Ultimate Guide To Setting Up A Staff Incentive Programme