Bonus

A bonus is a form of additional compensation provided to employees in recognition of their exceptional performance, contributions, or achievements beyond regular job duties. Bonuses can take various forms, including cash bonuses, profit-sharing, stock options, or non-monetary rewards like vacations or gifts. The purpose of a bonus is to provide employees with an extra incentive to work diligently, achieve goals, and contribute to the overall success of the organization.

In the workspace, compensation plays a major role in attracting, motivating and retaining talented employees. This is why bonuses have gained recognition in the workplace. It serves as a motivation to existing ad intending employees and encourages them to do better at their jobs. 

There are two main forms of bonus that can be given by a company; discretionary and non-discretionary bonuses. A discretionary bonus is a bonus that is given only when the company deems fit. It is not fixed and neither is the amount fixed but is left at the discretion of the employer. A non-discretionary bonus is a bonus that is stated in the employment contract of an employee. They can be dependent on certain factors, so it is clear to the employee what he has to do to earn such bonuses. 

The types of bonuses used by companies include: 

• Performance Bonus: This is the kind of onus given to an employee for a certain performance. It could be achieved goals and tasks, and can also be given to teams and departments.
• Retention Bonus: It is simply a bonus given to employees to let them know that their efforts are seen and appreciated. It is also done to keep employees from leaving an organization. 
• Referral Bonus: This is a bonus given to employees who refer talented candidates that are ultimately hired in an organization. They are usually given after the candidate has passed the hiring process and has become permanent staff. 
• Signing Bonus: This is given to employees when they decide to join the company. It is usually done to attract them and make them join the company especially when there is another competitor company pursuing them too. 

Some of the advantages of practising bonuses within the organization include: 

• It serves as a powerful motivator for employees, making them go the extra mile beyond their regular job responsibilities. 
• It creates higher employee retention and also builds loyal employees for the organization. 
• Bonuses help to attract top talents in the industry to whichever company is offering them. 
• It can also help organizations achieve their goals faster as employees are motivated to work towards company objectives. 
• It increases the level of employee engagement and satisfaction in an organization and creates a positive work environment. 

On the other hand, bonuses can also increase costs to the organization and may create lazy employees who only need external motivation to work. To maximize bonuses in the workspace, HR professionals can keep it simple over time, with probably one major bonus after a while.