How to Increase Your Year-End Bonus

How to Increase Your Year-End Bonus

As 2023 draws to a close, many employees have year-end bonuses on their minds. Regardless if your employer regularly distributes bonuses or if this is a brand new conversation you plan to initiate, a year-end bonus can significantly increase your income. 

In the U.S., 33% of companies offer year-end bonuses. Asking for a year-end bonus doesn’t have to be scary. However, while many companies want to reward their employees at the end of the year, if you have a specific figure in mind, you need to prepare a case for yourself.

Increasing your bonus requires careful planning and proactive efforts. Fortunately, there are a few strategies you can leverage to prepare your case for a higher bonus. In this article, we will explore a variety of effective strategies to ensure that your hard work and dedication are rewarded.

When Should You Ask for a Year-End Bonus?

As you collect information on your workplace performance and build the case for why you deserve a high year-end bonus, you may wonder when you should initiate this conversation with your superior. You’ll want to time it just right. If possible, don’t ask for a year-end bonus on a Monday or Friday; aim for the middle of the week. When in doubt, ask your superior when a conversation about compensation will work best for them.

This timing consideration also applies to your tenure at the company. If you’re new to the organization, don’t push for a year-end bonus early on. If you’ve been with the organization for a while and choose to ask for a year-end bonus, make sure your best intentions shine through, rather than acting like everything is about money.

Here are a few examples of times when you can ask about your bonus.

Annual Performance Review

Your annual performance review is typically scheduled in advance, giving you plenty of time to put together a case advocating for your bonus. This is an excellent time to ask for a year-end bonus because the purpose of this review is to discuss your workplace performance throughout the year. Thus, you’ll have the groundwork to share all you’ve accomplished for the organization.

The Close of a Project

Though this nomenclature may vary based on workplace and type of work, the moment when you’ve closed a project, won new business or completed a task is an excellent time to talk with your superior about your compensation. Be prepared with figures that resulted from the close of the project, such as revenue you brought in. This is standard procedure for many companies, especially those that offer commissions, so you can feel confident in this timing.

After a Financial Win

Similar to the above, creating financial gain for your employer is like creating the perfect moment to ask about year-end bonus potential. Examples of financial wins include landing a new client, winning a large project or exceeding sales goals. At this point, you’ll be in everyone’s good graces and more likely to receive an enthusiastic yes.

Outstanding Performance

If you’ve consistently achieved outstanding results for the company, it’s probably time to ask about your year-end bonus. You’ll want to outline for your superior how you’ve achieved outstanding results, like putting in extra hours or taking on additional tasks. Companies want to reward outstanding employees – sometimes all you need to do is ask.

Understand Your Company’s Bonus Structure

Once you’ve determined the perfect time to hold a discussion with your superior, there are a few other considerations to address. Before you head into a conversation about financial rewards, you need to first understand your company’s bonus structure.

For example, some companies base their year-end bonus on performance metrics established at the beginning of the year. Identify which key performance indicators (KPIs) and metrics your employer uses for bonus calculation and start preparing your personal metrics from the year.

Alternatively, if your employer does not publish a list of metrics they track, seek clarification from human resources (HR) or your superiors about how they calculate bonus amounts. Some companies use a less formal review system and some don’t have a review system in place at all.

Regardless if metrics such as KPIs are formally tracked within your organization, to increase the chances of a high year-end bonus, you’ll need to track your own KPIs and start researching standards in the industry.

Research Industry Standards

A set of numbers you want to be armed with is industry standards, such as your average industry salary range. You need to be well-informed about the current market and capable of presenting these standards to your superior.

One way to perform this research is by talking to your colleagues. While you don’t have to discuss specifics, it is beneficial to understand if they receive year-end bonuses and, if they’re willing to share, how they have negotiated them.

If you’re not comfortable talking to colleagues about this topic, there are plenty of resources online that share this information and more. Websites like Glassdoor’s Know Your Worth and Payscale have emerged as tools to understand average compensation for others in similar positions. 

Further, we’d be remiss to not mention the gender pay gap. According to the ADP Research Institute paper, Rethinking Gender Pay Inequity in a More Transparent World, there is a bonus gap of 69% between men and women. This gap impacts the total compensation gap in many workplaces. Women should especially research data related to gender pay inequity within their industry to share with their superiors. 

Track Your Successes

No matter your title or role, you should keep an ongoing record of your professional wins that you can leverage during performance reviews with your superior or HR. One strategy to stay on top of these successes is to keep a document where you track everything you’ve done throughout the year. 

As of 2022, the average bonus pay in the U.S. is 11% of salary for exempt employees, 6.8% for nonexempt salaried employees, and 5.6% for hourly employees. If you want to increase this amount and receive the highest bonus possible, you must have a list of successes to share with your superior.

Here are examples of items you should track throughout the year that you can share with your superior when asking for financial compensation: 

• A list of projects you worked on, if applicable
• A list of clients you worked with, if applicable 
• Metrics that resulted from your work
• Proof of success
• Attendance
• Feedback from colleagues and management
• Quality of your work

You’ll want to ensure that your contributions to the organization can be quantified when possible. Utilize data and metrics to illustrate the tangible impact of your work, directly linking achievements to company success and goals. Tangible evidence of your contributions serves as a persuasive tool when making the case for a higher year-end bonus.

Link personal achievements to company success. For example, did you take a course in search engine optimization that you were then able to use to boost your company’s website in search engines? Or perhaps you studied project management tools that you then implemented within the organization. Companies will want to see how you’ve directly contributed to their success.

Collaborate With Your Superior on Milestones

If you know in advance you want to earn a high year-end bonus, you can have a conversation with your superior in a one-on-one meeting about what you need to do to receive this. The two of you mutually can agree on milestones and arrange follow-up meetings to review your progress.

Your superior may provide you with objectives to achieve in an agreed-upon timeframe as well as helpful advice for how to achieve these goals. These objectives may be project-based or behavioral in nature.

Advanced discussion of projects and milestones is a great way to increase your odds for a year-end bonus, as many employers will award bonuses after setting objectives that need to be hit. This is also a good way to prove to your superior that you can manage various tasks and milestones within a predetermined amount of time. 

Develop Your Professional Skills

Committing to your professional development is a powerful, and mutually beneficial, strategy to optimize your bonus. Consider the skills you bring to the workplace as well as where you may have gaps or opportunities for improvement. 

Once you have identified the areas in which you’d like to grow professionally, pursue relevant training and obtain certifications. Resources like LinkedIn Learning and Google Career Certificates are great places to start for online courses.

You’ll need to actively showcase your newly acquired skills in the workplace. The intention of this is to align your personal development trajectory with the company’s overarching goals. This alignment communicates your dedication to personal growth as well as your commitment to contribute meaningfully to the company’s success.

Build Strong Relationships

What’s one word you hear commonly around every workplace? Networking. It is critical to cultivate positive relationships with colleagues and superiors. Not only can this help you increase your year-end bonus, but it can help set you up for future promotions and raises. 

To showcase teamwork and how you contribute to your workplace, collaborate on cross-functional projects. This doesn’t have to be only a project basis, though. Many organizations have opportunities for collaboration through areas like party planning committees or social teams. Joining teams like this proves to your employer that you are a team player involved with company culture.

Further, offer help to your colleagues when you can. Your colleagues will remember the help you provided and will likely share this with their teammates or in formal feedback.

Robust professional relationships enhance your visibility and contribute positively to bonus considerations, as they often reflect your holistic contribution to the organization.

Go Above and Beyond

A commitment to going above and beyond your regular duties is a hallmark of bonus-worthy dedication. Your superiors want to see that you have volunteered for additional responsibilities and that you have taken on these tasks with grace. 

Another way to demonstrate your dedication is by taking on new challenges. For example, if you stayed after hours to figure out how to more efficiently share work between teams, you’ll definitely want to highlight this to your superior. 

Many employers see working extra hours as going above and beyond. While you shouldn’t feel like you must work overtime in order to receive a year-end bonus, if you have put in extra hours, be sure to have these logged.

Efforts to go above and beyond not only showcase your commitment and dedication but also position you as a standout candidate for increased bonus considerations.

Demonstrate Financial Responsibility

Fiscal responsibility is a key consideration that can significantly influence bonus decisions. To steer this influence in the right direction, you should try to identify cost-saving opportunities and innovative ideas for revenue generation that align with the company’s objectives.

In addition, showcase how your financial decisions have positively impacted the company’s bottom line. Many companies will highly consider how you contributed to their revenue when calculating bonus packages.

Employers respect those who are good financial stewards. In return, this will help the odds of increasing your year-end bonus.

Communicating Your Request

For those who struggle with communicating their request for a higher year-end bonus, we’ve put together a few key phrases for you to leverage in conversations.

Requesting a conversation:

“I would appreciate the opportunity to discuss my performance and compensation in more detail during a one-on-one meeting, such as our annual review.”

Highlighting achievements: 

“I’d like to discuss my recent accomplishments, such as [name specific achievements], and how they have positively impacted our team and our company. [Begin to list how your achievements helped your team].”

Quantifying achievements:

“I have consistently exceeded performance expectations, as evidenced by [quantifiable metrics and KPIs].”

Showing gratitude and being a team player:

“I am grateful for the opportunities and experiences I’ve gained here. I believe a discussion about my year-end bonus reflects my continued commitment to adding value to the team.”

Providing market research:

“In my research, I’ve found that the market value for my role and skill set is [specific amount] and that others in my position receive a year-end bonus of [specific amount]. I wanted to discuss how we might align my compensation accordingly.”

Demonstrating professional growth:

“I have invested time in professional development, acquiring [relevant skills or certifications], which I believe enhances my contribution to the team. With these new [relevant skills or certifications], I have been able to [list accomplishments].”

Negotiating:

“I understand the company has some budget constraints, so I am open to discussing how we can find a mutually beneficial solution.”

Do’s and Don’ts for Asking for a Higher Bonus

If you’ve followed the strategies above, you’re probably ready to have a conversation with your superior about your year-end bonus. When you connect with your superior, whether that’s during a one-on-one or a formal performance evaluation, here are some do’s and don’ts to keep in mind.

Do:

• Be prepared to justify your request with quantifiable data.
• Stay open minded and calm.
• Listen to feedback from your superior.
• Be prepared to negotiate terms of the bonus.

Don’t:

• Say you deserve a year-end bonus without giving reasons why.
• Complain about your level of work.
• Threaten to quit. 
• Discuss your colleagues’ bonuses.

Etiquette When Receiving a Year-End Bonus

While every company distributes bonuses in different ways and in different timeframes, there are a few rules of etiquette you should keep in mind throughout the process.

When you receive a bonus, you should thank your superior for recognizing the work you’ve done. If you can do this in person, great, if not, a phone call will suffice. A thank-you is perfect to show your appreciation, and you’re more likely to keep getting bonuses.

Remember that the work that earned you the bonus should still be considered for your next raise. These two things do not cancel each other out. On the other hand, bonuses and raises reflect your performance as a whole, and you can use the same metrics you tracked for your bonus to advocate for a raise.

In conclusion, maximizing your year-end bonus is not a passive endeavor but rather a strategic and proactive pursuit. Consistent performance, researching industry standards, effective communication, a commitment to professional development and cultivating robust professional relationships are the pillars of success in this endeavor.

By following these strategies mentioned above, you can significantly increase your chances of receiving a well-deserved bonus that accurately reflects your hard work. Remember, the effort you invest in optimizing your bonus is also an investment in your professional future.