Bonuses are down across all industries: What HR can do instead

Employees shouldn’t be holding their breath for bonuses this year, based on new research from payroll platform Gusto. 

After a tumultuous year filled with layoffs and return-to-work wars, the end of 2023 saw a decline in bonuses across industries, the research found. 

But in an economy where employers are pinching pennies wherever they can, retaining employees is more important than ever, and lack of recognition can be detrimental to your retention efforts. 

So what should HR do?

Slowed job growth, employment led to lower bonuses

End of year bonuses were down in 2023 by between 3.8 and 36.2%. 

According to the Gusto data, bonuses paid by firms in December on Gusto’s platform averaged $2,145, 21% lower than 2022 and a whopping 40.1% lower than 2019.

Bonuses were lower across most industries, including:

• Technology (-3.8%)
• Retail (-16.1%)
• Healthcare and Social Assistance (-15.9%)
• Food and Beverage (-26.1%), and
• Transportation (-36.2%).

Other industries that had big dips include:

• Tourism & accommodations (-36.44%)
• Education (-26.16%)
• Facilities (-23.45%)
• Communications (-23.22%), and
• Real estate (-21.04%).

In addition to bonuses being lower, the amount of employees receiving those bonuses also dwindled in 2023. In fact, 16 of 22 industries had a decline in the number of workers who received bonuses in 2023 compared to 2022. 

On average, 2.7% fewer workers received a bonus relative to 2022, and 6.9% fewer received a bonus than in 2021.

The industries that saw the biggest drop in bonuses includes:

• Arts & Entertainment (-18.5%)
• Tourism & accommodations (-14.0%)
• Education (-8.2%), and
• Non-profits & associations (-7.4%).

What HR can do

With so many businesses choosing to give out lower bonuses – or none at all – paired with additional reports of lower raises, it’s clear employers are being conservative with their budgets amid a cooler job market. 

But the cost of replacing an employee – between hiring, training and more – can be a lot higher than doing what you can to keep your current employees.

That’s where HR can come in. Here are some cost-free ways to help retain, recognize and engage employees.

• Peer recognition: Peer-to-peer recognition can sometimes be even more impactful than recognition from a leader. Not to mention, building out a peer recognition program can help build camaraderie between team members and encourage employees to recognize everyone’s contributions.
• Training and skilling opportunities: Whether it’s through job shadowing, mentoring or continuous feedback, allowing employees the opportunity to hone their skills and develop within their field can be a valuable option that doesn’t have to break the bank with expensive L&D programs, and
• Flexible work: Many workers would be willing to take a pay cut to have more flexible work. Whether that’s only coming into the office a few days a week, early Friday leave or late starts, there are many ways to offer flexible work that can fit the needs of your workforce.