In a cost of living crisis, Gen Z employees need a financial boost all-year round, not just a discretionary bonus in December, says Nebel Crowhurst
From a “Brucie Bonus” to a “Bonus Round” an unexpected cash reward is always gladly received. A bonus at work, however, isn’t always as welcome as you first might think.
A bonus, made to employees in addition to their salary, is a widely used element of pay and performance, and helps reward staff when the wider company is experiencing success. If you do receive a bonus, it is most likely to be a thirteenth salary, or end-of-year bonus – an extra payment often given to employees at the end of December or just before Christmas. Although the amount of the payment depends on several factors, it usually matches an employee’s monthly salary and can be paid in one or more instalments. Yet as a form of financial appreciation, it is not without its controversies – or its critics.
The fact is many employees, currently facing the most challenging cost of living crisis most of us have ever known, are waiting for cash at the end of the year when they really need it now. The average monthly rent paid by tenants in the UK rose by nine per cent in the year to February – the highest annual increase since records began. In England, the biggest rise was in London, which already had the UK’s highest rent. The average monthly cost faced by a tenant was up by 10.6 per cent year-on-year at £2,035. And that’s not the only pressure – supermarket food prices have increased by more than 25 per cent over the past two years according to the consumer group Which?.
It all points to a population that isn’t just squeezed – it’s squished.
A one off once a year bonus helps people for a short time, but often employees assume their bonus is coming. As a financial reward, it’s almost taken for granted and seen as part of their overall monetary compensation, and not as something extra and discretionary. This is felt more keenly amongst the youngest demographic in the workplace – Generation Z. While their millennial and Gen X colleagues will no doubt remember times without bonuses, in particular around the 2008 global financial crisis, that can’t be said of those who are under 25.
I don’t believe bonuses have the same impact that they had even just 10 years ago – times have changed and the way we recognise and appreciate staff needs to as well. For example, many businesses across the UK have opted to implement an employee benefits and discounts platform in time for Christmas instead of the annual bonus as that usually helps employees with the financial burden of the holidays, and it goes well beyond the festive season.
Younger generations especially want instant gratification and immediacy, and so waiting a year for bonus doesn’t have the same retention value it once did. In fact, given that there is no true emotional connection to the bonus, perhaps it should be rolled into basic salary. It means the overall compensation package is the same, but the cash can be accessed across the year, not just at one set time.
12 mini bonuses across the year, as opposed to one large bonus, may help with sky-rocketing rents and eye-wateringly expensive groceries. With employees under financial pressures like at no other time in the last 30 years, perhaps a bonus, unlike Christmas, shouldn’t only come once a year.
Nebel Crowhurst, chief appreciation officer at Reward Gateway | Edenred