Bonuses and Retention

The bonuses can be a very strong retention tool in the company, when the sales and profits grows. The employees are able to wait for quite a long time to receive their huge bonus.

The bonus can have the impact on the retention of employees, as it is deferred payment to the employee. The employee knows about the bonus and it can be lost, when the employee leaves the company. The employee has to decide about the loss of the money, which is very difficult to accept.

The retention by the bonus can be dangerous. The demotivated employee can sit and wait for the bonus to be received and then he or she can decide to leave the organization.

Many organizations divide the bonus into more payments as the employees have to wait for a longer period of time. But, some fluctuation is healthy and it can damage the organization, when the employees cannot leave the organization freely and they know, they realized no financial loss.

The retention cannot be applied to all employees. The retention has to be applied to key employees and top performers and high potentials. The bonuses would provide retention for all employees, which is not good for the organization. The organization can be full of employees complaining on the managerial practice and HR Policies.