In certain sectors the word “bonus” has had some pretty bad press in recent times and it tends to provoke strong feelings in some circles, and nearly all negative. In these sectors a bonus has developed into something that employees feel they are entitled to rather than something that is an added extra and which therefore needs to be earned. This does very little to motivate employees to go that extra mile.

Emotions run high when senior executives are awarded large bonuses for just doing their jobs even if sometimes the company as a whole is performing poorly. If companies feel the need to remunerate their employees at a certain level in order to attract them and keep them then this should all be done via the base salary while leaving the bonus to be used as a discretionary reward for outstanding performance. And if the use of a bonus scheme is to be accepted by all employees within a company it should also be linked to the company performance.

So, the basic rules should be; make sure any bonus scheme is linked to the achievement of the whole organization’s targets; make sure the people who are actively driving the business forward i.e. the right people, are the ones that get rewarded, and last but not least keep everyone in the organization updated on their own and the company’s performance so that they can understand their role in its achievements.

The real key is recognition for good work over and beyond expectation. So yes, a cash bonus is always appreciated but then so are other forms of non-cash rewards such as shares, extra days off, gym membership etc. Whichever you choose the important thing is to engage and incentivize all of your employees, not have some of them seeing red.