3 Practices for Effective Bonus Administration

3 Practices for Effective Bonus Administration

3 Practices for Effective Bonus Administration

When executed effectively, bonus administration can incentivize improved performance. It also provides the recognition most employees seek, which can support employee engagement and help you retain your top talent. However, mastering bonus pay isn’t always easy. For this reason, we’ve gathered a few helpful tips to help you ensure you’re planning your bonuses to make the best possible impact on your workforce.

  1. Determine Which is Best for Your Needs
    Every organization is different, so the bonus program that works in one company may not be ideal for yours. Before you begin to weigh your options, start with your own needs first. What outcomes do you hope to achieve through bonuses? How can you structure a bonus plan so it aligns with your business priorities?

    HR Magazine recommends linking employee recognition tactics such as bonuses to your company values as closely as possible. They also recommend using tools (like compensation planning software) to help you keep track of which rewards are received most often. This can help frame your future decisions to consistently ensure your bonus system is tightly aligned with your current business objectives.

  2. Keep It as Simple as Possible
    While your bonus structures may vary according to factors like job description and location, keeping them simple will benefit everyone. Not only will bonuses be easier for you to keep track of, but employees will also be able to better understand the ways in which their performance is rewarded.


An article published by Becker’s ASC Review encourages employers to avoid complex bonus structures based on too many different factors. Instead, use the method recommended by Small Business Trends: link bonuses to a specific outcome or metric, like profit revenue. You might also consider focusing on collective bonuses, which can drive collaboration, more so than individual incentives.

  1. Clarify & Standardize Your Program
    No matter how you choose to structure your bonus program, creating a plan is only one step of the overall process. To achieve its intended outcomes, you’ll also need to communicate the bonus program clearly to the affected employees. Once they have a clear understanding of expectations, they’ll be better able to focus on delivering the right results.


HRsoft is a leading provider of strategic talent management software that improves manager effectiveness and business results. Our full suite of cloud-based HR software solutions includes applicant tracking software, compensation planning software, total rewards software, stay interview software, performance management software, and content management software. To learn more about our Compensation Management Software, COMPview, click the button below!

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