Page 102 - Retaining Top Employees

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90 Retaining Top Employees

of our retention-related goals), both by their nature and by the
creativity in the types of incentives. However, as we’ve seen,
because the targets should be attainable, most top employees
view incentives almost as part of base pay and, as a result, will
probably be counting on receiving them. (In fact, some will
have spent their incentives long before they’ve earned them!)
For this reason, be careful about switching a cash-based incen-
tive into a non-cash incentive—your employees may not like it.
Bonuses
Bonuses, in contrast with incentives, are something that
employees could not reasonably expect to attain in the normal
course of events. Bonuses can be either prospective or reactive:
• Prospective: A bonus that will be paid if the employee
attains a “stretch target”—a goal that’s beyond what the
employee could reasonably achieve.
• Reactive: A bonus that the organization decides to pay after
the employee has achieved something out of the ordinary
that was not planned (like landing a big new account or
discovering a new process that will save major costs).

As with incentives, bonuses can be paid either in cash or as
a nonrecurring, non-cash benefit (e.g. extra vacation time, a
paid holiday or conference, gift vouchers, etc.). However,

Making the Most of Bonuses
Well-designed and -implemented bonus plans can do several
things to help you meet your compensation retention goals.
Imagine that the VP of R&D tells the head of the team of R&D sci-
entists that if,in addition to meeting their normal operational goals for
the year,they additionally bring one entirely new product into beta
testing by the end of the year,fully documented in accordance with
company policies,then as a bonus the company will send the entire
team to Hawaii for a week—all expenses paid plus extra time off.They
achieve that goal and earn the bonus. If this achievement is properly
communicated,it’s a source of public recognition for the employees,a
motivating factor,a team-building exercise,a lesson in accountability,
and a trust builder,all at the same time.