Three Ways to Set Yourself Up for a Sweet Bonus Next Year

By Stacey Hawley (Chicago)

December 25th marks a holiday brimming with worldwide wonder and delight, underscored by the giving spirit. Bonus season, on the other hand, celebrates the act of receiving. When parents recite “it is better to give than receive,” they clearly are not discussing bonuses.

Companies with calendar year-ends communicate bonuses between January and March of the following year. Because most companies follow a calendar-year cycle, and award bonuses in March, bonus season is in full swing. Many employees’ bank accounts swelled in the last 30 days.

Small signs of economic recovery loom. According to Buck Consultants 2012 Compensation Planning Survey, both the size (amount of money delivered) and prevalence (use or eligibility) has increased substantially. Most importantly, the survey’s 350 respondents indicated the expected size of 2013 annual cash awards exceeds the 2012 target payouts and 2011 actual payouts for all employees. In other words, employees are beating plan, and earning above target payouts. While it is unclear whether the probability of achieving the target was increased to improve retention, motivation, and morale, at least payouts are improving.

Receiving an unexpected bonus boosts morale, encourages engagement, and motivates employees to repeat (or exceed) their previous years’ performance. At the executive level, compensation hovers at all-time highs. With the S&P 500 gaining 13%, the stock market closing at record highs, and companies practically hoarding cash, CEOs and senior executives are reaping the rewards. Although most companies dole out awards in base and equity, some CEOs still recognized record bonuses. Disney’s CEO Robert Iger earned $16 million because of outstanding financial results. And he is not alone.

But what about the rest of us? How do typical employees ensure above-average bonuses?

Admittedly, it’s probably too late to bump this year’s bonus but fortunately it is only April. 25% of the way into the 2013 performance cycle leaves employees with ample time to secure a good bonus next year.

Suggestion 1: Take charge
Employees should familiarize themselves with their company’s annual incentive process. Know when goals are established and approved, and how and when incentive awards are decided and communicated. If your manager doesn’t communicate, find out. Talk with other employees or meet with your manager to ask him/her to define the expectations.

Suggestion 2: Be as specific as possible
To achieve an above-average bonus, employees need to know what to do – exactly. If managers instruct employees to develop a new branding concept, employees need to know what makes this successful. Does the branding concept just need to be developed, or approved and communicated? Does the concept need to be approved by the end of the second quarter? Should the branding concept promote a product launch, product development or increased sales? If so, how much?

Jeffrey Pearlberg, SVP Global Client Banking and Wealth Management at Citi believes, “The most critical element is absolutely clear and specific expectations. The content of the goals and criteria can vary, but specificity is necessary for employees to direct the behavior.”

Suggestion 3: Stay in the Loop
Communication plays an integral role in ensuring a positive bonus payout. Ostensibly, not all employers actively engage in goal-setting or continuous performance feedback. If you are left on the sidelines, stay in the loop. Pat Peri, member of Resource Management Solutions and seasoned human resources leader, encourages senior leadership to actively participate in goal development. “Equally important,” explains Peri, “is the feedback along the continuum to give the associate a sense of where they stand and what changes need to be made if the outcome is not on target.” Request meetings with your immediate supervisor or manager to discuss your performance every two to three months. Specifically ask whether your performance meets expectations and, if not, what changes need to be made.

By definition, companies do not guarantee a bonus. However, incentive payouts play an integral part of the compensation structure and rewards provided to employees in most companies. Assuming the company achieves its desired financial performance, if you engage in active, ongoing communication and meet or exceed performance expectations, you should be well on your way to a nice bonus next spring.