Communicating Changes to Bonuses – and Avoiding Cousin Eddie

There surely are many takeaways from Clark Griswold and his family’s adventures. The tale spun in Christmas Vacation is no exception and includes an important lesson for accounting and finance managers: Don’t keep employees in the dark about compensation changes.

A recent Robert Half survey found year-end bonuses are likely to remain near 2012 levels this year. At firms where they will differ, bonuses are more likely to rise than fall.

Managers at companies where salary compensation, bonuses or other financial incentives are being adjusted need to communicate changes to staff as soon as possible. The alternative is setting up employees to be disappointed – like how Clark felt after seeing his swimming-pool dreams crash – and creating an atmosphere ripe for resentment.

These conversations aren’t easy, but people, even if they aren’t happy about them, understand that business demands change. If you need to share updates on bonuses, or other news affecting staff, consider these four steps:

1. Speak up early.

Once a change in compensation structure is fit to share, do so. This will shut down the rumor mill before it starts and give your team a chance to make any necessary adjustments to their expectations and personal budgets.

2. Provide as much information as possible.

Let staff know why the change is happening. For example, explain how costs cut now will help the company prepare for growth later. Also, if you don’t have all the answers, provide a resource, whether it’s something in writing or a human resources contact, people can go to with questions.

3. Empathize.

Pay isn’t the main reason people work, but it’s extremely important and shouldn’t be taken lightly. Be compassionate when delivering the news, knowing it could hurt some people more than others.

4. Find alternative perks.

Tightening budgets don’t mean employees can’t be rewarded for their work. Look for other ways to show your gratitude. For example, the cost to handwrite individual notes thanking your team for their contributions can be low, and a department lunch or donuts for the group don’t have to be expensive. Be sincere, and people will appreciate your efforts.

Managers in a separate survey from our company said communication is the best remedy for low morale, while the lack of it has the most negative effect on employee spirit. By keeping staff in the loop on compensation and other changes, managers give themselves their best chance to keep workplace motivation, and, ultimately, productivity and retention, high. 

A lack of information and sudden changes to salary and bonuses, though, can lead to worry and fear among employees. For Clark’s boss, it also led to a visit from Cousin Eddie.