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2 disadvantages to paying bonuses and what you can do to prevent them

by , 11 April 2016
I'm sure you know bonuses can help motivate your employees to work longer and harder for you, and in return they can eagerly await their earned reward.

But bonuses can also have some seriously negative effects on your business! I

That's right! If you're not careful, the potential benefits can easily fall apart because of possible consequences of giving bonuses in the workplace.

This is something which Gregory Hamel of Demand Media understands, and lists the following 2 negative effects giving employees bonuses...


Do you have a paper-shuffler working for you?

You know that person…

·         Always busy but never meets deadlines…
·         Always making excuses for why he doesn't meet company targets…
·         He doesn't meet his KPI's…
·         And he's constantly making costly mistakes…

The next logical step is to get rid of him and get someone who can do the job. But watch out, that could cost you BIG at the CCMA!

So what can you LEGALLY do?

Negative effect#1: Unrealistic expectations

The whole point of bonuses is to motivate employees and encourage them to go the extra mile.

But the irony here is that these bonuses can actually demotivate employees!

This can happen if the performance expectations are unreasonable and, ultimately, unrealistic for all intents and purposes.

Also, if an employee performs well, but the company has a bad year and can't afford to pay bonuses, he could feel very disappointed and demotivated.

Negative effect#2: Competition among employees

You'd be surprised at how many employees would value a bonus above ethics, let alone the collective functioning of, and co-operation within, your company.

Introducing bonuses can create competition among employees, which can actually be counter-productive, making the running of your business less efficient.

What can you do to prevent this?

1. You should ensure that your performance expectations for bonuses are reasonable and realistic; and
2. You should openly communicate the importance of co-operation among employees. Because if everyone works together, the company will do well. And if the company does well, it will trickle down to the employees, regardless of bonuses.

*Now that you know those 2 possible consequences of introducing bonuses in the workplace, along with 2 simple tips on how to manage them, page over to Chapter B 03 in your Labour Law for Managers handbook to see what the 5 benefits of implementing bonuses are.

If you don't already have this fantastic labour resource, click here to order your copy today.  

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