Survey: Spot Bonus Practices

by Justin Hampton

Spot bonuses are one of the many levers that Organizations have to drive performance, recognize achievements and improve culture.  This quick survey received 76 responses addressing several high-level questions around spot bonuses.  This survey found answers consistent with the 2016 World at Work Bonus Practices survey, found here.  Spot bonus programs may have varied results, but when administered effectively, can provide a wonderful means to retain and engage employees.  

Does your organization provide spot bonuses to employees?

By providing an immediate and a personal reward, spot bonuses are often deemed an exceptional means to recognize and reward employees without increasing fixed costs.  In this short survey, out of the 76 repondents, nearly 2/3rds of respondents provide spot bonuses to employees.  

Does your organization have a formal spot bonus policy?

Although the majority of organizations allow for spot bonuses, more than half of the organizations that provide spot bonuses have nor formal spot bonus policy, suggesting that spot bonuses may be inconsistent and the prevalance may vary within the same organization.  Based on our research, only slightly more than half of organizations have formal policies.  

Note:  One organization that responded has payment guidelines, but not a formal policy.

Is there a limit on the amount a single spot bonus can be?

Almost half of the organizations that provide spot bonuses have no limit o nthe amount a single spot bonus can be.  Considering the number of organizations that do not have a formal spot bonus policy, this may come as no surprise.  Of those organizations that do have spot bonus limits, the limits vary between $1,000 and more than $5,000 per bonus.  

Is there a limit to the number of spot bonuses an employee can receive in a set period of time?

Additionally, only slightly more than 20% of organizations that award a spot bonus limit the number of spot bonuses an employee may receive.  Given that the number of organizations that responded do not have a spot bonus policy, these findings are not surprising.  

Who Has the Authority to Approve a Spot Bonus to employees?

The approvals of spot bonuses are widely varied from the Direct Manager all the way to the Employee's executive leader.  Approximately 50% of responding organizations suggested that the Department has the authority to provide spot bonuses, almost 1/3rd of respondednts suggested that spot bonuses are approved at the Executive level.  While this survey did not ask for the respondents size or revenue, certainly the Company profile would have an impact on the approval process.  

What Percent of your Corporate Employees Received an Unexpected Spot Bonus in the Past 12-Months?  

Spot bonus utilization varies significantly.  However, it can be observed that in more than half of the Organizations that partcipated in this survey, fewer than 10% of employees received a spot bonus award in the past 12 months.  

How are spot bonuses funded?

Most organizations do not set aside special budgets for spot bonuses, but rather leave the funding mechanism to Business Unit or Departmental discretion.  

How effective have spot bonuses been in improving your organization's culture?

While no respondents claimed that the spot bonuses have been "Extremely Effective", none claimed that the spot bonuses were "Not at All Effective".  While spot bonuses are not a panacea, almost half of organizations believe that their spot bonuses are somewhat effective to very effective in improving the Organization's culture.