How to offer employee bonuses across globally distributed teams

It's a given that employee bonuses are a great way to motivate employees, tying into the long-standing principle of providing an adequate living wage—a concept that dates back to the Treaty of Versailles.

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 doesn't explain the gap, figuring out global bonuses gets complicated fast. Should you standardize across all locations or customize for each market? It's one of those decisions that keeps HR leaders up at night.

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.

Why Global Teams Need Strategic Bonus Programs

Global teams need strategic bonus programs because distance creates unique challenges around recognition and fairness. Here's why a thoughtful approach matters:

• Connection: Bonuses reinforce that everyone matters, regardless of location
• Alignment: They help scattered team members work toward shared goals
• Visibility: Remote contributions often go unnoticed without intentional recognition

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.

Here's the thing: there's no universal solution that works for every company. Let's look at how some innovative teams are tackling global bonuses.

Examples of employee bonus structures for globally distributed teams

Employee motivation is always challenging for distributed teams, but some companies have gotten creative with their bonus strategies. Here are three standout approaches that caught our attention.

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.

Managing Currencies And Payment Logistics For Global Bonuses

Paying bonuses globally isn't as simple as sending money overseas. You're dealing with:

• Exchange rate fluctuations: Your $1,000 bonus might be worth very different amounts by payment time
• Transfer fees: Banks love charging fees that eat into bonus amounts
• Tax compliance: Every country has different withholding requirements

A global employment platform handles these complications automatically, so your team gets exactly what you intended to give them.

Key Considerations For Global Employee Bonus Programs

Here's the reality: there's no magic formula for global bonus programs. You'll need to dig into your company's specific needs and build something that actually fits your team.

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, as the erosion of purchasing power during the 2008 economic crisis showed how global events can impact employee compensation.

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.

Building Your Global Bonus Strategy

Building an effective global bonus program comes down to three key elements:

• Fairness: Everyone should understand how bonuses are calculated and distributed. This principle is so crucial that the Global Jobs Pact identified fair wages as a means of responding to international economic crises.
• Compliance: You need to follow local tax and employment laws, which can include international standards like the Protection of Wages Convention that ensures wages are prioritized even in cases of employer insolvency.
• Cultural awareness: Bonus expectations vary significantly by region

Ready to implement a global bonus program without the headaches? Oyster handles the complexity of multi-country payroll and compliance. Start hiring globally and focus on building your team instead of managing logistics.

About Oyster

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

Oyster enables hiring anywhere in the world with reliable, compliant payroll, and great local benefits and perks.