It’s Not Okay to Remove Employee Bonuses as a Cost-cutting Measure

Employee Bonus

As a leader of a company, you’re under intense pressure to ensure that everything runs smoothly. One of the biggest reasons why you face tons of problems is budget. If the company isn’t earning well and the operating expenses are increasing, you might be forced to think of ways to cut the cost. 

There are many areas for you to consider cutting. Removing the bonuses expected by your employees is definitely not the right way forward. 

It dampens morale 

The employees are the backbone of any company. Without them, the business will most likely fail. The success of the company depends on the productivity of these employees. Therefore, you want to give them enough reason to work hard. Removing their bonuses would make them lose their motivation. Even though some of them aren’t only working to earn money, they still need the bonus to augment their expenses. It would be too mean of you to take away these bonuses. 

It signals that your company is under trouble 

company is under trouble

If you reached a point where you have to remove the bonuses of your employees, you’re sending a message that the business is in deep trouble and it might not hold on for a long time. As such, employees might start to find other possible workplaces. No one wants to work in a company that could go bankrupt any time soon. All companies face financial troubles, but you don’t need to let everyone in your team know that it’s really bad. 

It’s a slippery slope

Once you think about removing bonuses, the next step might be to lay off some employees. You’re only a few steps away from totally closing the business. It’s a scary thought among employees and it tells them to stop doing anything to help the company and start finding ways to save themselves.

It shows your lack of creativity 

As a leader, you need to show that you can take the team to financial success. Even in difficult times, you need to come up with ways to save the business. Several companies managed to stay afloat without the need to lay-off employees or take their bonuses away. If you settle for this solution, it signals that you’re too lazy to even think of ways to solve the problem. It’s an easy path, but the repercussions are terrible. 

Recheck the company’s regular operating expenses and determine why you’re having a difficult time keeping the business alive. Perhaps, there are other unnecessary expenses that you can cut. You can also look for cheaper alternatives. Exhaust all other means to reduce the cost and increase the overall income. Don’t immediately about letting employees go or hurting their income source. You can be a financially smart leader, but also empathetic.

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