The Real Value of Employee Bonuses
Employee bonuses are a staple of the restaurant business. Not all restaurants offer bonuses to managers or any system of financial reward for employees beyond basic compensation. However, many restaurants offer quarterly bonuses to managers based on financial performance and some offer holiday bonuses to employees. There’s good reason for this tradition. Most restaurants are small businesses, and bonuses remind employees that there is a reward for team success.
At the same time, the absence of a bonus can also send a strong signal to managers that the store’s performance needs improvement. There is perhaps no greater message the operator can send to his management team than a change in the bonus allocation; either in the form of awarding a long-earned bonus or removing one that managers have long relied on. In either case, bonuses can provide great motivation for managers, which can trickle down to the entire staff.
Quarterly Bonus Structure
In most cases, quarterly bonuses are allocated as a product of financial performance, which is either a profit or a loss for the quarter. Quarterly bonuses should be established as an objective accounting formula that is transparent for the entire management team. In this way, there is no subjectivity about the process and no concerns from anyone about bias or fairness.
That said, it is not uncommon for operators or the General Manager to divide the cumulative bonus among managers based on individual performance, contribution to success, or some other criteria. In this way, some managers may receive a larger cut than others. If this sounds harsh, it’s important to remember that this is a harsh business, and success or failure can seem as arbitrary as the wind.
Rewards and Punishments
In the end, managers working together should receive roughly the same bonus amount. This is important for the sort of mutual support and teamwork that is the cornerstone of successful businesses. However, in some cases it’s a good idea to add to the bonus check of a manager who has done outstanding work or who has consistently exceeded expectations. This sets a great example for the staff that performance will be rewarded, and is a great tool for morale.
At the same time, the reduction or absence of a bonus check for individual managers can also send a clear message to the staff. In a small business, complacency has to be eliminated, and the absence of a bonus check can articulate this clearly. It’s rarely a good idea to single out specific managers in this way, but a reduced bonus or the absence of one for an entire staff can speak volumes.
Building a Family
For the employees, a holiday bonus is a great way to bring people together and show appreciation. Many restaurants use a holiday party or basic gift as a reward for a year’s worth of hard work. Holiday parties provide a great opportunity to bring employees from all walks of life together to build camaraderie and a sense of family. This is a great idea for newer restaurants or those working to reduce employee turnover.
The holiday party or employee bonus may not make financial sense for every restaurant. This is no small obstacle in many cases, especially when it’s the end of the year and restaurants want to cut back on expenses to spruce up the P&L report. But the long-term impact of showing appreciation for the people who got you there can be huge. This step is worth consideration in most cases. After all, the only way to be in this business is to be in it for the long haul.