It is a monetary payment made to an employee in excess of their standard salary or compensation package.
Bonus is one of the ways employers reward their employees for a job well done. And offering regular, significant bonuses is one way to keep your best people from looking elsewhere for a job.
Bonuses are usually determined as a percentage of annual salary, although giving all employees the same monetary bonus is also an option. Much depends on your corporate philosophy and goals. A growing number of employers are cutting wages and increasing the portion of performance-based compensation, such as bonuses. Through this approach, companies can more directly and immediately reward outstanding achievements. And many companies are basing bonuses on the performance of not only the employee, but also the company in order to reward personal and team achievements.
A premium payment is generally made to employees in addition to their base pay as part of their salary or salary. While the base salary is usually a fixed amount per month, the bonus payments most often vary depending on known criteria, such as annual turnover, or the net number of additional customers acquired, or the current value of the shares. of a public company. Therefore, bonus payments can act as incentives for managers to draw their attention and personal interest to what is considered a winner for the economic success of their companies.
There are widely used elements of pay for performance that work well in many cases, even when a fair proportion of employee participation in the success of a business is desired. However, there are problematic cases, especially when the bonus payments are high.
Bonuses are prone to being adjusted or even manipulated for the benefit of the employees who are responsible for reporting them, while they are already planning their leave with a golden handshake. Establishing good employment contracts can be a means to avoid that - at least to some extent - but this is rare in reality.
