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November 24, 2008
5 "Don'ts" for Bonus Season
How will the deteriorating economic conditions of the past few months impact your year-end bonuses? Hay Group, a global management consultancy firm, explains why--regardless of your current situation--you shouldn't make any hasty decisions when it comes to bonuses, and provides 5 specific things your organization should avoid as the bonus season approaches.

"Times like these can prompt knee-jerk reactions and irrational decisions that can leave employees with a bad taste in their mouth," Tom McMullen, U.S. Rewards Practice Leader for Hay Group, said in a press release. "Companies need to avoid making hasty decisions due to current economic situations, and consider the longer-term effects on employee engagement, motivation and performance. Many companies are being more prudent with compensation and bonuses, but if employers don't play their cards right, they may find themselves without a full house when the economy turns around."

Here are 5 "don'ts" for the upcoming bonus season:

1) Don't remain silent. Be "straight and visible" with employees in this tough economic environment and avoid "decree by memo."

2) Don't approach bonuses in a vacuum. Establish "tight linkages between performance goals and payouts" and let employees know what their bonus signifies, says Hay Group, otherwise the organization is wasting its money.

3) Don't pull the rug out from under employees. If your organization decides that it "should limit bonuses in a tough year, executives and managers should lead by example," according to Hay Group.

4) Don't reward only with cash. Monetary compensation isn't the only way to let employees know that you appreciate them. According to Hay Group, the coming months are going to be tough for employers trying to balance suffering performance and a down economy with the need to reward and motivate employees for their efforts during the year.

5) Don't get stuck on the "here and now." Organizations should keep a focus on the longer-term perspective--and encourage employees to do the same. "It's easy for an employee to feel disadvantaged this year because of the economy and their resulting bonus ­ but by differentiating "career income" employers can maintain high levels of engagement, which is critical," according to Hay Group.

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