As budgets are finalised for 2026, think hard before just rewarding your top performers

Depending on your bonus culture, January may be when discretionary awards for 2025 are being decided, for others, this is when their “balanced scorecard” for 2026 is being reviewed and updated.

Either way, now is the time when decisions will be made around where bonus monies (actual or potential) will be deployed.

And for businesses that may be wanting to be prudent with their spending, one temptation is for bonus payments to only be given to star performers.  The theory being that these are the “rainmakers” and without them growth is not possible.

Whilst we understand this thinking, we would urge caution.  The potential for unintended consequences is writ large.

Firstly, if your current bonus plan already has a wider eligibility criteria for receiving a bonus, taking away this is likely to have an immediate demotivating effect.  And this effect will start from the moment the change is announced and is therefore independent from whether there is any funding available for bonuses at all, later in the year.

Secondly, top performers rarely work in isolation.  Even the best sales people or fee earners are likely only to able to “make the wins” because they have support both within their team and in the wider business.

Finally, it can have a significant impact on the culture and togetherness of the business.

Within businesses, the maxim that “we assign importance to the thing we notice” is well applied to bonus structures.  A movement to only rewarding high achievers tells people that what is important is individual contribution, rather than cohesion and collaboration.

If the above matters resonate and you would like to discuss how MM&K could assist you with developing your approach to incentive structures – please contact Stuart James (stuart.james@mm-k.com) in the first instance.

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