10 Reasons Your Employees Should Have Bonuses And Stipends

Bonuses and stipends are incentives that companies use to encourage, reward, and recognize the exceptional performance of their employees. Typically, these are given in the form of cash or gift items of non-monetary value. However, not all business owners realize the importance of giving bonuses and stipends because they think that these are an extra expense.

Although such incentives may seem like an additional expense to your business, there are many reasons why your employees must get bonuses and stipends like a career development stipend. Below are some of those reasons:

1. Improve Productivity

Stipends and bonuses are tied to an increase in productivity as well as encourage employees to improve processes and systems, be more efficient, and get rid of waste. Just see to it that such incentives are well-balanced across the company-wide, division, and individual goals so the results don’t inadvertently create any unwanted divisions or behavior within your company or among teams.

Making well-balanced and clear goals across every employee tier is the key to achieve success and improve productivity.

2. Retain And Attract Top Talent

To be a successful entrepreneur, the ability to make a legacy that lasts beyond your departure from your company has a connection to your ability to retain and attract top talent. Finding talents is challenging and retaining some is more difficult. This is one of the reasons why you should never forget to provide employees with incentives.

Structured bonuses and stipends where performance and compensation targets are understood clearly can help your business stay competitive in the market and may also retain your talents for a long period of time.

3. Boost Profitability

One of the reasons why your employees must have stipends and bonuses is because it can help boost your business through increased profits, higher return on investment, and improved return on equity. The premise behind bonuses and stipends isn’t just to improve your business but to let employees share in the returns and take a stronger interest in your company’s overall health.

4. Creates A Friendly Competition Among Staff

Use stipends and bonuses to create some friendly competition between each of your employees. You might offer incentives to your top performers for the month. For instance, if you have a financial planning company, reward your employee who secures the most assets for the month. Offering bonuses that facilitate competitions regularly will keep employees striving for excellence.

A friendly competition among your team will have a positive impact on the productivity level as employees increase their output to get a bonus or stipend. Just see to it that you send your employees a weekly update to keep the competition active.

Competing for a bonus every month creates buzz and fun within the office, which lifts morale and recognizes your contributors. Employee stipends and bonuses also bring lots of benefits to companies that have the potential to boost their operating efficiency. To achieve the best possible results, use a combination of team and individual bonuses.

5. Support The Purpose, Vision, and Strategy Of Your Business

The stipends and bonuses you give to your employees will reinforce the company’s performance and would help you support your company’s purpose, vision, strategy, and goals. By giving incentives to your employees, it makes them feel more secure financially since most do their best to strive for excellence to get bonuses.

6. Reward The Best

bonuses and stipends - reward the best

Another reason why your employees should have stipends and bonuses is that it helps you provide recognition to those who made significant contributions to your business growth. While others argue that bonuses or stipends are a poor motivator, more employees feel that their contributions and work to the company are appreciated and recognized. So, a monetary reward like a bonus makes their contributions to your business concrete in addition to personal and public celebrations.

7. Recruitment Benefits

Employees who get enticing bonuses and stipends are more likely to feel compensated and would show loyalty to your company. Typically, loyal employees are less inclined and content to look for some employment opportunities, which help reduce your recruitment costs and save time. For instance, if you’re paying a lot of money for new hires, you’ll save more if you’ll provide the right bonuses or stipends that your employees deserve.

8. Boost Morale

Bonuses and stipends may tend to cause frustrations where employees don’t understand how their job impacts the company, how the compensation system of the company works, and how they may achieve a set of goals. Oftentimes, this confusion is the reason why there’s a high turnover within the business. Some factors may include the company’s environment, the relationship between the employee and the manager, personal life and proper work balance, and so on.

With bonuses and stipends, this helps establish the relationship between the performance factors so employees may see the rewards clearly from their efforts, as well as feel improved self-confidence and self-esteem. Such incentives also help foster a team-oriented and positive environment.

9. Strengthen Work Relationships

When all of your employees work together to achieve bonuses and stipends, they build a sense of camaraderie, pulling everybody for the common good. This may help strengthen the bonds between business owners, managers, and colleagues. It may also improve regular work relationships between co-workers and departments, which results in increased productivity. Moreover, it can help motivate your employees.

10. Gain More Loyalty To Your Business

Employees who get bonuses and stipends gain a positive impact on their earning potential and are more likely to be reliable and loyal to the business they represent. It’s true if the incentives have residual value. For instance, if the insurance company employee receives a bonus after signing up for more new clients and gets a residual bonus every year the client renews, the earnings may increase throughout his employment period. It won’t be only advantageous to the employee, but also to the employer.


Integrating bonuses and stipends in your company’s incentive plan may be a bit tricky, especially if you’re just getting started and don’t have many profits. However, you have to take note that your qualified employees deserve it since they’ve worked hard and did their best to make your business grow. Just make sure to plan your stipends and bonuses before you decide to give these to your employees to ensure that it won’t affect your company’s cash flow.

Dragan Sutevski

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan