Companies need to avoid making hasty decisions due to current economic situations, and consider the longer-term effects on employee engagement, motivation and performance, according to Tom McMullen, rewards leader with the Hay Group. “Many companies are being more prudent with compensation and bonuses, but if employers don’t play their cards right, they may find themselves without a full house when the economy turns around,” he said.

As bonus season approaches, here are five things employers should AVOID:

1. Silence. Organizations often hunker down and limit employee communications in an effort to appear calm during tough times; however, being straight and visible with employees is more important than ever in this environment. Avoid "decree by memo."
2. Reviews or bonuses in a vacuum. Many organizations are working to establish tight linkages between performance goals and payouts, but if employees don't know what their bonuses signify, the organization is wasting its money.
3. Pulling the rug out from under employees. If an organization decides that it can and should limit bonuses in a tough year, executives and managers should lead by example.
4. Rewarding only with cash. Many employees work in organizations for reasons other than money, and there are a number of ways to reward employees besides salary increases and bonuses. Recognizing and showing an appreciation for employee's efforts in ways other than monetary compensation can go a long way.
5. Getting stuck on the "here and now." Organizations and their employees should remember the longer-term perspective. It's easy for an employee to feel disadvantaged this year because of the economy and their resulting bonus—but by differentiating "career income," employers can maintain high levels of engagement, which is critical.

Source: The Hay Group, 100 Penn Square East, Philadelphia, PA 19107; telephone: 1-215-861-2000.