Promoting a great worker is one of the best perks an employer can offer. You not only get to make someone’s day, but you get the added benefit of knowing that happy employees don’t often head elsewhere if they’re compensated well. Everyone loves knowing their work is appreciated, after all.
First things first: tell your employee! Whether you take them out to lunch, sit them down in the conference room, or mention it in their performance review, seeing the smile on their face is one of the best parts of the deal. It’s great policy to keep this fairly formal, though. Don’t just pull someone aside in the hall.
You’ll want to come equipped with a new job title, a pay raise, and any other benefits you think they deserve. Make sure they understand what their new responsibilities will be and what you expect of them in the new role.
You might want to doubly reward this employee with a bonus—on top of their promotion and higher salary. However, it is not mandated by law. Generally, companies give out year-end, or sometimes quarterly, bonuses if employees exceed a set goal. For example, if your account manager achieves the lowest turnover rate in the company’s history, perhaps it’s time to reward their hard work.
If you know you want to give bonuses to great employees––for reaching sales goals or other metrics, like longevity––you can set up an Employee Bonus Plan from the start. That’ll let your staff know exactly what they need to do to be rewarded for their hard work.
It’s important to note that bonuses, sales commissions, or other business-related expenses may be taxed in different amounts than an employee’s base pay. Consult IRS Publication 15, Employer’s Tax Guide, and Publication 15-A, Employer’s Supplemental Tax Guide for more information.