Benefits of offering employees a performance-based bonus program include encouraging an increase in productivity or adherence to standards, demonstrating the value of the work an employee does through direct compensation, and avoiding complaints from employees regarding the fairness of bonus plans. The specific details of such benefits may depend on the nature of the company, the bonus plan and the work environment.
A performance bonus plan is a rewards system wherein employees earn prizes, typically cash allotments, in exchange for meeting a specific goal or objective that directly relates to measurable actions. It stands in contrast to seasonal or position-based bonus programs, which award the gift to all employees regardless of the quality of work. As such, one major benefit of these programs is that employees need to prove that they deserve the bonuses by achieving the underlying requirements, such as earning a specific amount in sales or maintaining a call-time metric for a customer service department. This shows employees that placing more effort into work performance gives them a direct and positive benefit.
Similarly, tying the bonus to a measurable work action allows every employee participating a chance to earn the reward, which promotes positive actions among employees and shows that the company is not unfairly rewarding certain members. In some cases, such a program can also help improve productivity and output among employees with a poor performance record by providing a clear reason to get better.