Global Payroll and Benefits

How to offer employee bonuses across globally distributed teams

Read this before you jump on the bandwagon.
September 1, 2021
Oyster Team
How to offer employee bonuses across globally distributed teams

It's a given that employee bonuses are a great way to motivate employees and keep everyone fired up. 

Unfortunately, that doesn't seem to be the case for globally distributed teams. According to a U.K. government-backed labor and productivity study, remote workers were around 38% less likely on average to have received a bonus. 

While this isn't a valid reason for this cheerless stat, determining the best way to offer bonuses to a global team can be tricky. For example, what's the best way to handle bonuses across multiple subsidiaries or different countries? Do you standardize or localize? 

With tons of variables to consider, your human resources team can have a lot on its plate when working out an employee bonus program for your distributed team. 

In this guide, we share how other companies (like yours) approach employee bonuses, common types of rewards you can offer your employees, plus some points to consider while setting up your employee bonus program.  

Types of employee bonuses 

Graphic that says types of employee bonuses

Cash bonuses are certainly the most common type of bonus, but they're not always the best option. Here are some other standard options you can add to your employee incentive program:

  • Retention bonus: A retention bonus is one of the many ways you can convince an employee who is considering leaving your company. While it's a financial incentive, you should also include perks (such as flexibility) that address some of the issues that might be causing them to consider leaving. It may also be a way for you to compensate them for the time they've already put in working for your company.
  • 13th-month salary: The 13th-month salary is a bonus given to employees at the end of the year. It usually equals a month's salary, and the methods for calculating it differ from country to country. The name refers to it being the 13th paycheck an employee receives in a typical 12-month year.
  • Commission bonus: Commission bonuses are great for incentivizing employees for exceptional performance. The basic principle of commission bonuses is employees earn a percentage of earnings/revenues. In most cases, it's a bit part of the employee's overall compensation. Something to note—in situations where commissions are the only form of payment, it shouldn't be considered a bonus.
  • Vacation bonus: ln addition to full pay, some employers also offer a vacation bonus for the time their employees are on vacation. In simple terms, employees get extra asides their usual wages while away on vacation.
  • Spot bonus: Like the commission bonus, this is a merit-based bonus doled out to employees who went the extra mile to complete a project or achieve the company's goals.
  • Referral bonus: A referral bonus is a monetary gift given to employees to thank them for helping you find great talent. For example, an employee could get a referral bonus if they encouraged a friend to apply for an opening at your company. In some cases, companies pay out these bonuses after the new employee has worked for a while—and might withhold the bonus if the new hire isn't successful in their role.

Remember, there is no one-size-fits job search site that works for every type of employer. Here are some examples of how companies are offering and structuring employee bonuses for distributed teams.

Examples of employee bonus structures for globally distributed teams 

For most, if not all, distributed teams, employee motivation is a hot topic.

In the constant search for peak motivation tools, hacks, and routines, a bold few have stepped up with unique bonuses for their employees worldwide. Let's take a closer look.

Zapier's de-location package 

Zapier, the automation tool, offered employees a $10,000 de-location bonus to move away from San Francisco to encourage remote work and boost productivity. This was a bold move back in 2017 and served as motivation to other startups looking to move employees out of the Bay Area.

Stripe's relocation bonus

In 2020, Stripe offered a similar bonus package to encourage employees to go remote. Employees got a juicy $20,000 relocation bonus for moving out of Seattle, San Francisco, and New York. But they also had to accept a pay cut of upwards of 10% off their base salary.

Olark's vacation bonus

Olark, the live chat software company, gives its remote workers a $1,000 cash bonus should they go on vacation and actually take the time off—no checking in, no answering questions, just relaxing. Fellow remote workers who struggle with disconnecting can see how this incentive can help them take their minds off of work and be fully present during their time off.

Considerations when it comes to global employee bonuses

When setting up a global employee bonus structure, the most important thing to know is there is no such thing as a silver bullet that'll work for everyone.

You're going to have to sit down and take the time to dive deep into your organizational requirements and figure out what you do and don't need in your bonus plan.

With that in mind, here are a few points to consider before setting up your employee bonus plan:

Will your bonus structure be location-dependent?

Will your bonus plan be benchmarked to local peers or standardized? A standardized structure can seem simple to administer. However, inflation rates and currency fluctuations can upset the apple cart here. 

So, you'll need to find a balance between administration, employee engagement, and financial planning. Tools like Oyster can take care of all the complexity of localized bonuses while you focus on managing your team.

Will bonuses be tied to performance or revenue targets?

Performance-based bonuses are a great way to boost productivity. Unfortunately, it also means not everyone gets a bonus. You'll also need to account for employees in teams with no direct correlation to revenue or overall business performance.

Will you be transparent about the bonus structure (internally/externally)?

There's no right or wrong answer. It's okay to aspire to be the next Zapier or Stripe. But you need to consider your company culture and growth stage.

Are there market factors you'll need to consider?

Some countries, such as most Latin American countries, expect employers to offer a "guaranteed cash compensation" covering expenses such as housing, education, or a Christmas bonus. You'll need to balance your global bonus strategy to remain compliant with local laws while keeping your employees motivated.

Global employee bonus structures: Should you try it?

We won't sugarcoat it: If you want your bonus policy to be more than a fad at your company, you'll need to put in some work. 

The complexity and constantly changing nature of global HR compensation rules and regulations means that getting it right will require a healthy measure of critical thinking, trial and error, and above all, patience. With the right tool in place, you should provide a great employee experience and keep your team motivated.

For helpful tips on how to manage the 13th-month salary, check out this blog post.

About Oyster

Oyster is a distributed HR platform designed to enable visionary HR leaders to find, hire, pay, manage, develop and take care of a thriving distributed workforce. It lets growing companies give valued international team members the experience they deserve, without the usual headaches or the expense.

Oyster enables hiring anywhere globally—with reliable, compliant payroll and great local benefits and perks.

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