Good, Better, Best? Tax Cuts, Bonuses, and Engagement

By now you’ve probably caught wind of the new tax bill in town. If you work for a corporation, chances are you’re reaping some of the benefits yourself. On December 22, 2017 President Donald Trump gave American corporations a holiday treat.  He signed a new tax bill, thus effectively reducing the corporate tax rate from 35% to 21%.

Two months later, hundreds of corporations are passing on these savings to their employees. One-time bonuses, salary bumps, and even increases to 401(k) matching programs, are among the ways that at least 2 million Americans will be rewarded as a result.

Sounds nice, right? Sure, it does. It certainly is nice to receive a one-time $1000 bonus, as employees of companies such as AT&T, Alaska Airlines, American Airlines, Bank of America, Comcast, JetBlue, Nationwide, and Southwest Airlines can attest. What is even nicer, is receiving a salary bump, or an increase to 401(k) employer match. However, as the list compiled by the conservative group Americans for Tax Reform shows, three times as many companies are going with the one-time bonus option.

One-time bonuses are easier for employers to hand out and do not increase a company’s fixed costs. “The one-time bonus is an easy thing to do: It generates good will, puts money into employees’ pockets, and you’re not committed long-term to anything,” said Gregg Levinson, a senior retirement consultant at Willis Towers Watson in the Washington Post article “Why many companies are giving bonuses — not raises — after the new tax cuts” by Jena McGregor.

Another potential concern is that while one-time bonuses and pay increases certainly generate goodwill, the boost to employee engagement that such efforts are designed to create is almost certain to fade with time.

A sustainable investment

Don’t get us wrong, we applaud companies that doled out employee bonuses. We just think there are ways for organizations to add lasting value as they size up their balance sheets and look to drive long-term success. We believe it’s possible for cash-flush companies to put some money in their employees’ wallets AND generate employee engagement for the long-term.

What if these companies invested in a product that created excitement around work, stimulated engagement in the company’s mission, and generated an active drive to accomplish the company’s goals? Well…they, and you, can.

Enter MyObjectives. If you haven’t heard of our MyObjectives app, here’s a quick tour to get you started. For those of you who have, let’s do a little math.

 

Scenario 1:

Organization size: 100 employees

Solution type: one-time $1,000 bonus

Overall cost: 100 x $1,000 = $100,000

Result: $100,000 cost to company for 1-3 months (estimated) boost to employee morale and engagement

 

Scenario 2:

Organization size: 100 employees

Solution type: 5% pay increase

Overall cost: 100 x .05 x $60,000 (assumed average salary) = $300,000 per year

Result: $300,000 per year cost to company for 4-6 months (estimated) boost to employee morale and engagement

 

Scenario 3:

Organization size: 100 employees

Solution type: MyObjectives (with 10 scorecards)

Overall cost: $175 per month x 12 months = $2,100 per year

Result: $2,100 per year cost to company for ongoing boost to employee morale and engagement. Expected $193,800 yearly ROI (ROI Calculator) to re-distribute to employees as the organization sees fit!

 

As you can see, not only is MyObjectives the most affordable option, it also produces a higher ongoing return for the company and the company’s employees year after year. The best part? MyObjectives is so affordable that companies can still hand out money AND use our app. Why not do both? Instant gratification of employee bonuses/raises, and long-term satisfaction of continued employee engagement? Sounds like a match made in heaven!

To learn more about MyObjectives and how your organization can benefit from implementing this tool, please feel free to take-a-look around! If you’ve done your due-diligence and are ready to try it out for yourself, head on over to our pricing page, or fill out this form and one of our team members will be in contact with you shortly.

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Paul Niven

Paul Niven is a management consultant, an author and a public speaker on the subjects of corporate strategy and performance management systems, like the Balanced Scorecard.

Ben Lamorte

Ben Lamorte is the founder and president of OKRs.com. He advises business leaders on the best methods for defining and making measurable progress on their most important goals.

OKRs with a Mission

Are Objectives and Key Results (OKRs) too focused on the short term? Not if you add the company mission to the equation.

So What’s the Score?

Scoring for the performance management system, OKRs, has evolved over time. And likely will continue to be fine-tuned.