A bonus is additional compensation awarded to employees beyond their regular salary or wages, typically as a reward for performance, productivity, or achieving specific goals or milestones. Bonuses may take various forms, such as cash bonuses, profit-sharing, stock options, or non-monetary incentives like gift cards, travel vouchers, or extra paid time off.
Bonuses can serve several purposes within organizations, including motivating employees to achieve individual or team objectives, recognizing and rewarding outstanding performance or contributions, and aligning employee efforts with organizational goals and priorities. Well-designed bonus programs can incentivize high performance, foster a culture of excellence, and enhance employee engagement and retention.
Employers may offer bonuses on a discretionary basis, such as annual or quarterly performance bonuses, or as part of structured incentive programs tied to key performance indicators (KPIs), sales targets, or company profitability. Effective bonus programs are transparent, fair, and clearly communicated to employees, with clear criteria and metrics for eligibility and payout.
You may also be interested in learning about these terms:
Bonus
Key Performance Indicators (KPIs)
Performance Management
