Mar 27, 2021
Basically, people tend to love the idea of bonuses because extra or free stuff is hard to pass up. Of course, they come with a lot of caveats, too. Understanding how they work and why they’re provided in the workplace can help you choose between a job with poor compensation and one where you’re set financially.
Let’s get through important things that help you settle down with the detailed information on bonuses.
What Is a Bonus?
In simple terms, a bonus is a form of compensation that’s not guaranteed and that is usually paid after the completion of a certain event. Bonuses come in many shapes and sizes, but generally speaking they’re performance-based.
This means a company distributes them based on how an employee or group of employees contributes to team or company goals. Bonuses are being tied to a specific quota, your level, or your performance, especially when fitting into the best Jobs Near Me (your location).
What are the types of Bonuses and how do they work?
There are different types of bonuses which are distributed quarterly and in few other cases, yearly. Some are a one-time thing, others are recurring. It completely depends on what role you’re in, what you contribute, what level you’re at, and what your leadership is like.
It is based on overall company performance. So you may get a large or small bonus depending on how successful your organization or specific department has gained. Also, your contribution to success plays a major role.
A spot bonus is for people who go above and beyond and is usually tied to a task that was outside the scope of your role. It’s normally a one-time thing, if not an occasional occurrence depending on priorities, budgeting, and your leadership.
It is a one-time bonus provided when you sign on to a new role. Companies might offer it when an employee is walking away from something better, or if the employee is moving to a new city for the job and the company wants to cover some of the costs.
This is similar to a signing bonus, and is about retaining valuable talent. It’s typically provided during an acquisition, merger, or big company restructuring to convince someone to stick around for an extra period of time.
A referral bonus is meant to encourage current employees to refer great candidates for jobs at their company. They might be Freshers Jobs or when recruited experienced persons. It’s typically not given until the candidate is hired and has stayed on for several months.
Why do companies provide bonuses?
This is just because that’s what the market tells companies to do. If other organizations of similar industry, size, or geography are offering their employees bonuses, a company may feel obligated to do the same to compete for good talent.
Companies also want to hire people who they know are going to perform, and when there’s a reward for output you’ll attract a certain kind of person. Some people may find this concept stressful. Compensation is one means to drive performance.
Are bonuses a guaranteed thing?
Never, bonuses are offered according to the management’s policies. Most bonuses are discretionary and an addition to someone’s salary, making it practically impossible to force companies to provide them.
Can bonuses be negotiated?
The expectations might be too high; however you might not be receiving that huge when the company is providing you a bonus. But if you are really willing to negotiate, there is a possibility to meet your expectations, although it might not be completely fulfilled.