Anatomy of an Employee Bonus

Potential for long-term payoff
The spot bonuses cost Baptist Health more than $13 million, but could have a long-term payoff. According to the American Society for Healthcare Human Resources Administration, reducing turnover by 1% can save healthcare organizations $1 million per year.

The cost of turnover is roughly 1.5 times the salary of exempt healthcare employees and .5 times the salary of non-exempt healthcare employees. So promoting job satisfaction makes sound financial sense.

"It used to be you went to a place, you stayed there for life, and the organization took care of you for your whole career. Now we know people change jobs a lot more frequently, and there's been talk about the erosion of that social contract." says Steven Slutsky, a senior consultant in PricewaterhouseCoopers' Human Resource Services Practice.

"Something like a spot bonus, when given for a good reason, tells people, 'you know what? This organization does care about me and maybe I should consider whether this is a place I do want to make my career, or whether I should give my organization the benefit of the doubt when someone else is calling.' But the key is you have to balance that in a way that won't offset the financial objectives of the organization."