Saurabh KaleWondering what a salary bonus is? Bonuses are incentivised rewards that can help boost employee engagement and productivity once added to their compensation package.
Bonuses are a form of compensation practised in diverse businesses. They are contributed to the compensation package of employees in a company. So, they are either incorporated into their annual salary or their contract amount. Typically, they serve the purpose of expanding the value of different employees who work in a firm. But they can come in various forms.
Bonuses are served to potential employees who prove to be assets to the firm. This is a great way of rewarding them to amplify their engagement and productivity in the organization. Some of these bonus structures contain multiple criteria that comprise the financial success of the firm. They may also encompass the evaluation of the team’s overall performance and individual output.
If you are looking to dive into the more comprehensive bonus meaning, get all ears!
What Are Bonuses?
The definition of bonus can be as standard as a form of compensation provided to eligible employees alongside their annual salary, contract amount or set hourly wage. They typically surpass the average financial expectations of an employee within a set firm and work as great motivators for them.
Bonuses may be provided to both beginner-level and advanced-level employees as per their deliverables to the organization. In this process, it may also enable better employee retention. Let us read further to understand them more accurately.
Understanding Bonuses
Bonuses are provided to employees in various forms. While some of them receive it in the form of cash, others may do the same as stock options or stock. All-in-all, bonuses are designed specifically to complement the base pay of diverse employees in a set organization. These are offered by the employers of the firm who shortlist employees for bonuses on the basis of workplace performance, diligence and much more.
Bonuses are also offered to employees when new hires are made, referrals are practised to foster enhanced employee recruitment and refer successful candidates. Some employees also receive employee bonuses that are delivered as annual, milestone or spot bonuses, respectively.
There are different types of bonus that employers provide to their employees. These may range from:
1. Incentive Bonuses
Referral bonuses, signing bonuses and retention bonuses are all different aspects of incentive bonuses. A signing bonus is typically offered to those potential candidates who they want to entice so these employees can accept the position and become important assets of the firm.
These come in the form of exceptional monetary offers. In the same way, a referral bonus is one where employees are presented with bonus rewards for recommending candidates to the company. On the other hand, retention bonuses, as the name implies, are provided to those employees who need loyalty encouragement.
2. Holiday Bonuses
Various companies provide these bonuses specifically during the month of December to their employees. Gift cards, gifts or even cash as salary bonus are certain ways to reward these bonuses to employees. Generally, employees who have been retained in the company for a long time or those who have accomplished specific company goals for the firm are rewarded with these bonuses.
3. Performance Bonuses
When employees perform excellently within a set organization, they are provided performance bonuses. These are typically delivered after specific projects are completed. They may also be provided with this type of payment bonus during the end of a fiscal year.
4. Bonus Inflation
Certain companies practice generating bonuses to even low-performing employees even when it has the tendency to take a toll on their growth and revenue generation. Some firms may do this in order to foster employee backlash or jealousy, which eventually makes them outperform themselves in the workplace environment.
5. Special Consideration
Bonus shares, dividends and bonuses in lieu to pay are some types of special considerations that are made among employees. In fact, these are practiced far more frequently today to avoid salary raises which can be quite vexing for several employees out there.
The Bottom Line
Different companies provide salary bonuses as per their capacity, affordability and flexibility. So, the type of bonuses that are offered among employees in different firms may vary accordingly. If you want to know about the salary bonus setup in your firm, you can inquire with your HR or employer about the same.
FAQ
1. How much is a bonus typically?
Typically, there is no set amount to define a bonus. Since they vary as per the company’s size, capacity and affordability, it is best to compare bonuses between firms so you can choose the best for yourself.
2. Do bonuses count as salary?
Bonuses can either be more or less than the base salary of a specific person. But they cannot be counted as salary.
3. Why do companies give bonuses?
To help reward employees for their good performance and boost employee engagement, productivity and retention. They may also practice distributing bonuses to share company success, encourage specific behaviour and attract top talent.
Sharanya Rao
Monica Jamwal
Add comment