Cash bonuses have traditionally been used to reward employee performance, communicate the value of an employee, recognize, support employee loyalty and more. But many business owners—particularly small ones—may not have the cash needed to hand out bonus checks. Given the complexities of business operations, combined with the challenging economic climate, cash bonuses may simply not be a viable option. If you’re a business owner starting to look ahead at ways to reward employees, here are some creative alternatives to cash bonuses to consider.
Flexible Working Arrangements
Employees typically appreciate being offered the option to have flexible work arrangements. Consider allowing employees to work from home on certain days of the week on a fixed or rotating basis. This will have a residual effect, enabling them to have a healthier work-life balance and likely helping them to have improved job morale in the process.
Professional Development Opportunities
Show employees that you care about their careers by offering professional development opportunities. In this scenario, you would pay for continuing education courses, off-site and in-house seminars and other professional development plans. It may entail sending employees to professional educational events, paying for travel, tickets and accommodation.
Wellness Programs
Instead of cash bonuses, consider implementing one or more wellness programs. This will help to keep your employees in good physical and mental condition, which may ultimately result in fewer sick days. It will also help your employees to feel positive about working for your company. Some ideas for wellness programs include:
Gym memberships
Massage treatments
Mental health counseling and support
Bonus Vacation Days
Paid vacation days are a premium perk that employees generally cherish. They’re often seen by employees as nearly equivalent to cash, since the money comes in the paycheck for hours not worked. Because you’ve already budgeted for payroll, giving bonus vacation days is one of the easiest ways to give to your employees without actually having to pay out of pocket for anything. Ideally, the employee would be able to take the bonus vacation days at any time during the year; not just during the holidays. Your liability would be covering your business demands while the employee is off work for the extra days. Finally, you can offer the bonus vacation days as a permanent change to policy, or as a one-time bonus.
Stock Options or Company Equity
If your company is public, you could offer stock options in lieu of cash bonuses. Many larger corporations use this tax advantageous strategy, as your CPA can tell you. If you don’t have stock options to give, you could offer employees equity shares in the business.
Equity is measured as shares in the value of a company. They give employees incentive to help the business succeed, since they would share in the profits on some predetermined level. Equity compensation and equity bonuses are increasingly popular for business owners who aren’t flush with cash. They’re also popular with employees, who appreciate the investment value of partial ownership in the place where they work.
Organizing company equity programs is too complex to do by yourself. You’ll need the help of a CPA to draw up the proper plan and paperwork. But, once you’ve put the process in place, it will always be something you can implement in the future to give employee bonuses without handing over cash.
Customized Benefits Package
Another great way to reward employees in lieu of cash is to offer customized benefits packages. You could offer an a’la carte benefits package that may help take certain burdens off the shoulders of your valued employees. To illustrate, a child care benefit won’t help those without kids, but an employee who’s a parent would really value this, because then they don’t have to pay for daycare. Potential benefits aside from childcare include pet insurance policies, commuter passes, restaurant gift cards, grocery store gift cards and more.
Experiential Rewards
Consider giving employees unique experiences like tickets to concerts, sports events or exclusive dining experiences. These rewards create lasting memories, showing appreciation in memorable ways. While this kind of bonus does cost you as an employer, you may have personal resources available where you can attain discounted tickets based on the fact that you’d be buying bulk tickets. For example, you may sit on the board of a local live theater, and be able to get box seats for a live event. Or, you may have a friend of a friend who can get you a discount on ski passes for your entire company. For this idea, you’ll need to think outside the box and consider all your available resources.
Personal Enrichment Courses
Another option is to offer personal enrichment courses or classes. These could take the form of online or in-person courses that your employees can choose from. Ideas include things like a gourmet cooking class, adult continuing education courses, a speaking or writing course, woodworking courses, painting classes, and more. Think of these as ways that your employees can develop fulfilling interests outside of work; things that they might not have the discretionary income to buy for themselves.
Benefits of Considering Alternatives to Cash Bonuses
As a business owner, you might not have the cash available to simply write checks to valued employees. But by implementing one or more of these ideas, you can communicate your appreciation for your workers without breaking the bank.
There are significant tax advantages to these ideas, as well. Many of them can be deducted on your business tax return, which may reduce the amount due on your business taxes. Talk to your CPA before you put any of these ideas into place. There may be certain ways that you have to organize the idea so that you can maximize your business’s tax benefit. For more information and ideas about how best to reward your employees, contact your CPA today.
by Kate Supino