President Trump’s tax bill was signed into law in December 2017. The enormous overhaul, called the Tax Cuts and Jobs Act, is the first major rewrite of the tax code in more than 30 years, with many provisions for individual taxpayers and corporations.
One of the most impactful changes is that corporate income tax has been reduced from 35 percent to 21 percent. In addition, the new law calls for a one-time tax rate of 12 percent on cash returns and 5 percent on non-cash for corporate money repatriated from overseas. For large global enterprises, this could mean a large, unexpected return. Read more about the law here.
As a result, more than 260 companies have announced one-time bonuses in anticipation of their inflated returns. “The tax cut will be an ongoing benefit for us and we wanted to share this with our employees. It is the right thing to do,” Teresa Tanner, who oversees marketing and human resources at Fifth Third Bank, told The New York Times.
According to a recent Mercer poll, “Impact of U.S. Corporate Tax Reform on Employee Rewards,” nearly one-third (32 percent) of responding employers said they expect to redirect some portion of corporate income tax savings into their employee rewards programs.
With the ongoing reduction in corporate tax rates, it’s a logical opportunity to invest in ongoing recognition vs. a one-time bonus. While one-time bonuses make a one-time impact, micro bonuses, awarded throughout the year, can provide a continual, steady lift for employees – for the same investment.
If an employee receives a $5,000 bonus at the beginning of the year, they’ll typically experience a three to four-week lift in energy and engagement – then it’s gone. A $50 or $100 award can trigger that same three- to four-week lift in energy and engagement. These small awards, especially coming from peers, have the same impact.
If that $5,000 award was split into $50 and $100 awards and distributed through crowdsourced recognition from peers to recognize a job well done, the difference is stark. Social recognition through a peer-driven awards program allows for a lift all year long, for the same investment.
Through these extra funds based on the new tax code, HR and finance leaders have an opportunity to lift all employees throughout the year, leveraging the power of their peers to recognize each other. Not only does this give individual lift to employees, it builds stronger connections and bonds, leading to greater trust in colleagues, managers, and leaders.
The correlation is strong: Harvard Business School published a study in 2015 showing participants’ performance significantly rose after receiving praise, while a 2015 analysis by Glassdoor showed a weak correlation between higher pay and job satisfaction, with company culture and values contributing most to overall satisfaction. Building a high-trust work environment from social recognition reduces unwanted turnover, and can boost ROI.
Globoforce customers have demonstrated a correlation between increased social recognition with retention and engagement. Hershey’s SMILES program led to an 11 percent increase in employee satisfaction with rewards and recognition, and employees who receive recognition through Eaton’s E-STAR program are 2 times less likely to leave Eaton.
Social recognition is a management practice that unlocks the potential and creates a culture of engagement and passion – and it only takes about 1 percent of payroll to see the positive impact.
The recently published 2018 SHRM/Globoforce Employee Recognition Report shows that this more human-centered approach can help meet recruitment and retention challenges. Of the 738 HR leaders surveyed, the majority say their employee recognition program helps with employee experience (89 percent), employee relationships (86 percent), organizational culture (85 percent), employee engagement (84 percent), and organizational values (83 percent).
Rather than handing out a one-time bonus, investing in a long-term social recognition solution ensures that employees have a sense of purpose and meaning throughout the year. Recognition is scientifically proven to make someone feel valued when given more frequently.
Interested in learning more about the power of social recognition vs. a one-time bonus? Request a demo and unlock the full potential of your people by providing purpose, meaning, and appreciation for the work they do every day – not just once a year.
The Corporate Tax Break is an Opportunity to Invest in Your People – And Your Bottom Line
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