Gold Star Treatment: How to Structure Rewards & Give Bonuses to Your Awesome Employees

To bonus or not to bonus. That is the question.

It all depends on the size of your digital agency, and whether you’ve got in-house employees, remote workers, or contractors working for you.

Listen, I’m all about employee bonuses – whether they’re cash bonuses or simply doing something nice like delivering a delicious cake to a team member’s door to say thanks – so you know what I’m going to tell you to do.

I know not everyone is in a position to offer big, extravagant bonuses to their employees. But there are ways of doing it that can work for your business, no matter how small.

Your employees will thank you for it!

Why should you offer bonuses to your employees?

All employees love to be shown the appreciation they deserve.

Plus, it’s just nice to be nice, isn’t it? (Yes, I am a big softie!)

But seriously, your employees work hard, and they deserve a little reward for their efforts to show them how much you care.

How, you ask? An employee bonus program! That’s how!

There are benefits to you as an employer other than that warm, fuzzy feeling you get when you do something nice for someone else. :’)

Productivity increases by 22% in companies offering employee bonus programs.

By keeping employees engaged and rewarding them with a bonus payout, you’re cultivating a more productive and motivated workforce, boosting employee morale, and ultimately increasing your company’s profits and efficiency as a result.

Now I like the sound of them apples!

What kind of employee bonuses can you give?

When we think of employee bonuses, we typically think of the impersonal (although still very welcome) Christmas bonus payments delivered directly into an employee’s paycheck by a seemingly separate entity. (Santa, is that you?)

Sure, absolutely no one is saying no to a Christmas bonus. But, there are tons of different reasons to reward your employees and ways you can show them appreciation if you want to add that little personal touch, too.

Let’s explore!

Types of bonuses and what they’re used for:

• Signing bonus: Offering a new hire a bonus when they sign with your team
• Referral bonus: Giving an employee a bonus who refers a new hire
• Retention bonus: Saying thanks to an employee for staying with you
• Holiday bonus: Does exactly what it says on the tin, really
• Discretionary bonus: Rewarding an employee for reaching a specific goal

And you don’t necessarily need to fork out a ton of money to reward your employees. Here are some other employee rewards ideas to think about.

Different ways you can reward your employees:

• Traditional cash bonuses
• Vouchers (don’t have to consider payroll taxes!)
• Additional time off or holiday days
• Little treats and random acts of kindness
• Birthday presents for each team member
• Shoutouts for doing an awesome job
• Shares in the company for heads of departments

*Bonus point on bonuses: I also like to get little gifts for my employees’ pets – because they’re the real MVPs of our daily Zoom check-in.

Deciding who gets what in an employee bonus plan: how to give bonuses to employees

So you’re convinced offering employee bonuses is the right choice for you as a digital agency owner (yay!). Now it’s time to figure out how to come up with figures in a way that’s fair to everyone.

There’s no one-size-fits-all answer when it comes to creating an employee bonus structure. That said, here are some common ways it’s typically done to help you jump-start your employee bonus plan.

1. Incentivize employees to reach targets with Key Performance Indicators (KPIs)

There’s nothing quite like steadily working towards and reaching a goal, is there?

Many digital agencies set targets for their employees, which could include individual goals, team achievements, or company-wide milestones. Reaching these goals will earn them bonus compensation as they triumphantly cross the line like they’re in ‘Chariots of Fire.’ (I already know you can hear that 80s drum sound and iconic piano in your head.)

If you’re taking this route, keep everything super above board by setting goals with measurable results.

Identify and clearly communicate the performance metrics and KPIs that you’ll use to evaluate employee bonuses, and provide regular feedback on their progress to keep them engaged and motivated.

It helps to talk it through with your employees first to see what kind of milestones they’re hoping to reach professionally. That way, they’re working towards goals that are mutually beneficial for you and your agency.

Be careful, though!

If you don’t properly consider the KPIs you’re outlining and the impact they could have on your business, things can get a little sticky. Dun dun DUN!

You want to be sure you’re incentivizing the right kind of behavior and not encouraging work that could actually wind up damaging your business.

Take, for example, an incentive of signing the most new clients or completing a certain amount of projects.

Both sound good on paper, right?

Well, what you could wind up with is poor-quality customers and mistake-ridden projects that end up costing your agency time, resources, and money in the long run.

92% of employees will repeat an action they get recognition for, so it’s super important that you’re encouraging the behavior you actually want.

Remember, what you measure is what you get when it comes to performance bonuses.

2. Base bonuses on company-wide goals and success

It’s like they say: teamwork makes the dream work.

You can reward employees and create bonus structures based on the overall goals of your digital agency to encourage your employees to focus on the success of your team and your business.

Whether it’s reaching revenue targets, improving processes, or stepping up your services, bonuses should reflect and support your growth goals as a company.

Just as with KPI-focused targets, bonuses based on company performance need to be super transparent.

It’s important to provide your employees with actionable efforts they can make to move the dial as they work towards their goals so they have control over their progress.

Real-time feedback is essential to keep your team motivated, too. So monitor their progress, discuss their journey towards their targets, and bust out the pom poms as you cheer them along!

3. Reward everyone when the company does well

I’ve managed to cultivate a team of professional writers that essentially resembles the Care Bears, so team bonuses just feel right to me.

Everyone has a part to play in your agency’s success, right? (Or at least they should!)

So why not reward your employees as a team?

You can use the EBITDA approach (earnings before interest, taxes, depreciation, and amortization) or keep it simple by rewarding everyone based on their wages.

Depending on your team and the different disciplines that make it up, employees will contribute to your company’s success in unique ways based on their specific role, so the bonus amount they make might vary depending on their position.

You can tailor your bonus structure to reflect the responsibilities and impact of each role within the company, acknowledging the unique contributions of each team member and keeping each employee motivated towards achievements specific to their role.

While the final amount may differ for everyone, the bottom line is that everyone reaps the benefits when your agency is doing well.

This is how I do it in my own content agency.

I give annual bonuses at the holidays – typically an extra week’s wages – to acknowledge my team’s hard work throughout the year and thank them for all the cat memes shared when we needed them most.

We’re an almost exclusively remote team, too, so I make sure we all get together once every quarter to connect in person and treat them all to some wholesome food and activities that we all enjoy. (I know, we really are too cute!)

Want to talk to other digital agency owners about how they structure and give bonus pay?

Whether you opt for discretionary bonuses or annual bonuses, bonus structures will look different for every agency, depending on your team and industry.

The main thing is to find a unique model that works for you. And focus on maintaining a good company culture throughout the year to cultivate a happy company filled with happy employees!

There’s a whole community of digital agency owners just like you over at The Admin Bar Facebook Group. Join the conversation!