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What Is a Bonus?

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  • Written By: Michael Pollick
  • Edited By: Bronwyn Harris
  • Last Modified Date: 12 July 2014
  • Copyright Protected:
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    Conjecture Corporation
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Many companies discover that workers from the factory floor to the highest executive offices generally consider money to be a powerful incentive to work longer, increase productivity or improve morale in the workplace. This additional money usually arrives in the form of a bonus, a supplemental payment not considered a regular part of an employee's salary. It may be given to employees who reach a specified production goal, for example, or to sales executives who exceed an established quota. Some companies routinely give bonus pay to all qualified employees during the Christmas holiday season.

A bonus is often connected directly to performance, such as generating more sales or motivating a production line to meet or exceed a quota. Knowing there is a tangible financial reward for increased productivity can be precisely the kind of motivation many employees need. Employers can use the promise of extra pay to entice managers to motivate their subordinates towards a specific goal. Sometimes, simply maintaining an accident-free work environment can result in a performance bonus for supervisors and managers.

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Bonus pay could also result from a company's overall financial success. If a company has a particular good fiscal quarter, employees may receive a financial reward for their hard work. Employers can often generate a significant amount of good will from their employees if the company is willing to share the wealth through occasional bonuses. While such pay is not always possible, the idea that hard work on the factory floor can be recognized by owners and executives often improves employee morale.

For many people, the most common form of extra pay is an end-of-the-year "Christmas bonus." This is often calculated according to an employee's straight salary for a pay period, adjusted for certain deductions. A holiday bonus is meant to be a gesture of appreciation from a company to its employees for their hard work throughout the year. For many employees, this bonus translates into gifts for family members or funding for an extended vacation. While there are never any guarantees where extra pay is concerned, many companies do make an effort to provide at least one annual bonus paycheck to their regular employees.

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Discuss this Article

anon81330
Post 3

a company should provide the bonus according to your performance. you are fully entitled to receive the bonus from my side.

anon6197
Post 1

Hi,

I am leaving the company in good terms after 6 years because of an international move.

I did very well throughout the year. It's a boutique company but has good finances. No bonus in sight for me!

Do you think they didn't pay bonus because I'm leaving anyway?

But isn't bonus a gift for that past year's performance?

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