Be Happy, Give Away Your Bonus

Our friends at the Harvard Business Review recently published an interesting article about the different ways employees spend their bonuses and how their decisions affect morale. Their research shows that employees who give away at least a portion of their bonus to others tend to feel better than those who spent the entire amount on themselves. The Review suggests that companies “would do well to think about encouraging employees to share more of their bonuses with others,” creating what they call a prosocial workplace. To find out more about the research study, visit the Harvard Business Review.

A Prosocial Workplace

According to the Harvard Business Review’s article, even giving small amounts (as little as $5) can boost an employee’s morale on a given day. As an employer, giving a bonus is a way of rewarding employees for their efforts, and the employee should be able to decide how they would like to spend this money. However, employers can certainly give employees more options by creating a prosocial workplace. According to the study, “Managers should consider providing employees with opportunities to help others in addition to themselves.” The article suggests that the outcome could be substantial: “Encouraging employees to give away some of their bonuses and thereby create a prosocial workplace might make even modest bonuses really pay off in increased employee happiness.”

Follow the lead of these companies

Looking for some ideas on how to create and foster a prosocial workplace? Here are just a few:

  • In 2007, a North Dakota bank gave out bonuses of $1,000 to full-time employees and $500 to part-time employees. The catch? They had to give it all away to charity. And videotape it. (HR Wench)
  • The Harvard Business Review presents one great example of a company that created a prosocial environment among its clients: “Google [provided opportunities to help others] for its AdSense clients during the 2007 holiday season: The company gave each a 2.0 gigabyte USB flash drive and a $100 gift card for DonorsChoose.org, to be donated to an education program of the recipient’s choice.”
  • Even one of the nation’s most well-known philanthropists is in the game, attempting to create a prosocial environment on a reality television show: Oprah’s Big Give

If you or your employer are looking for ideas on how to create a prosocial environment that promotes charitable giving, check out Charity Navigator’s Guide to Giving in the Workplace and northeast Ohio-based Community Shares’ Benefits of a Workplace Campaign. For more information about volunteering in Northeast Ohio, visit Business Volunteers Unlimited, an organization that ERC is personally involved with.

Is your workplace prosocial? Do you agree or disagree with donating your bonus? Share your ideas with other readers by commenting below!

Sources: “Help Employees Give Away Some of That Bonus,” by Michael I. Norton & Elizabeth W. Dunn. Harvard Business Review: July-August 2008.

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8 Responses to Be Happy, Give Away Your Bonus

  1. Andrew says:

    The intent is not bad, but there are easier and better ways to boost morale than suggesting or requiring employees to give any or all of their bonuses. People work hard for that money and to make such a hyprocritical suggestion is a lot to ask.

    If any employees need to do this, it is the executives. They are the ones who can actually make a difference. At most companies, if you took the executive bonuses and the bonuses for everyone else, they’d be unsurprisingly close or what’s worse and more common, well over the of everyone else combined.

    The point is an employee’s morale would be way better if they didn’t feel they were getting screwed by their employers, who are more than capable of making a bigger difference, but out of the goodness in their hearts choose not to.

  2. greatworkplace says:

    Interesting points, Andrew – thank you for your feedback. It seems as if you’re a proponent of giving employees options to be charitable, but not making it mandatory.

    You bring up an interesting point about executive bonuses, which brings up another good question: Should employers differentiate the options they give for charitable giving among employees and executives?

  3. HR Wench says:

    The name is HR Wench, not HR WRench :) I cracked up when I saw that!

  4. greatworkplace says:

    Oops! Correction made. Thanks for the great resource HR Wench!…and thanks for correcting our mistake.

  5. Andrew says:

    I do think employees and executives should be handled differently. Employees should be given an option on how much they give away and executives should have no option other than choosing which charities they will give to.

    My reservations apply more to the medium to large companies where the abuse of executive compensation is ubiquitous. I would anticipate them not including stock options to any of this bonus giveaway talk. If you make employees give away their cash bonus, then to be fair executives would have to immediately convert any options they received and give that away as well. If you used some sort of percentage, the options would have to be part of the base number.

  6. LC says:

    If employees are forced or even strongly encouraged to give away their bonus money to a charity then it is not truly a bonus. To me, the thought of a bonus is compensation from an employer to say thank you for a job well done. It is then up to the employee to do with that as he or she chooses and they should not have to make their choice public. Some individuals prefer to keep their charitable contributions private.

    Companies that choose to get involved in the community are doing a wonderful thing and a company should encourage their employees to become involved in the community, but forcing them to do so is unethical. An employee’s time and money should be used as the employee chooses, not as the employer dictates.

    Unless community involvement and contributions are a part of employment terms, then those things should have nothing to do with bonuses or raises. It would be nice if a company gave employees information about making donations and methods for doing so and it should be left at that. When managers and executives “encourage” employees to give, they may be placing an unnecessary and unappreciated pressure on employees to follow through.

  7. greatworkplace says:

    Great comments, LC. It certainly seems that companies like the bank in North Dakota that gave it’s employees bonuses that had to be donated are taking something away from the true meaning of “bonus”.

    Like you, we applaud workplaces that give employees options to support charitable giving. You bring up a great point when saying forcing employees to participate in community service is unethical…I’m sure many others have feedback on this issue.

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