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How do Bonuses Affect Employees Work Performance


All employees work hard at their jobs, for two main reasons. Firstly, they want the company to reach new heights and secondly they would like to get noticed by the bosses and seniors in the company. As we all are well aware, today money speaks louder than words. As a boss in an organization you are bound to know that bonus program plays a great role in affecting employee work performance. Prior to giving a bonus to any employee, it is vital that you weigh and measure your decision carefully so that you do not end up doing something you regret later on.

employees work performance bonus

How to Calculate Bonus for Employees?

The following mentioned below are few tips that help employers in calculation of bonus for employees.

1. Calculated based on the performance of employees:

If you are in a soup thinking about how to calculate the bonus for the employees in your company, you can always choose to give them their bonuses based on the manner in which they have performed in the last year or six months. If you calculate things in this manner you can be rest assured that the employees are going to pull their socks up and work more efficiently. If they get more things done, that is going to help the company reach new heights of success. However this being stated, this method does breed a bit of ill will and even jealousy among the employees. This is one of the best bonus check calculator.

2. Calculations based on the number of years service they have rendered to the company:

Longevity is often considered the best and most fair basis of bonus calculation of the employees. In this method, all the employees are divided into a number of categories and those who have been around for the longest period of time are given a higher bonus pay  than the rest of the workers. This serves as a great way of thanking those elderly and experienced workers who have stuck around with the company in good times as well as bad. If it is a year end bonus, many companies choose not to give employee bonuses to those who have not been around for at least twelve months.

3. Bonuses which are given equally to all employees:

There are some companies which prefer to give their employees bonuses on an equal basis irrespective of what their contribution has been over the last year as well as irrespective of how many years of dedicated service they have rendered to the company. Obviously, this method is liked by some and hated by many. It is the new comers who benefit the most from such a bonus scheme. Companies hope that by doing this they encourage all the employees to give their all, irrespective of all other circumstances. This ensures that all employees are equal and no one is better than the next.

How to Pay Bonuses to Employees?

The following mentioned below are few tips regarding payment of bonuses to employees.

1. Bonuses paid in the form of cash:

Most companies prefer to give the bonuses for employees in the form of cash. If the company has managed to do well in the recent part then a share of the profits are divided among the employees. This money which is given to the employees makes them feel rather excited. We all know that nobody likes to work for free and employees work for either getting a promotion or a bonus. The bonus can be handed out as an on spot bonus for achieving a particular goal, it maybe a year end thing or it may be a reward given for recommending an employee who has managed to secure the job in the company.

2. Non cash bonuses:

Non cash benefits are certainly not as well appreciated as the cash benefits which are given at some companies. To keep your workers happy, you must ensure that the non cash bonuses which you are giving are worth it. Non cash bonuses include some gift coupons which you can give. You must ensure that if you are handing gift coupons, then they are coupons to things which the workers are interested in. Employees are never going to care to work hard to get the bonus if they find that the reward is cheap and boring.

Impact of Reward on Employee Performance:

1. Serves as a powerful incentive for them:

One of the biggest impacts of rewards on the employee performance is that these rewards serve as a powerful incentive for the employees. Employees are not greedy but they certainly like the thought of receiving an honor or prize if they are able to achieve some goal which has been set or solve a complicated problem which the company has been facing. No matter who you are or how much salary you are getting in your company, the thought of an performance bonus or incentive is bound to bring out their competitive edge.

2. It brings out the best in the employees:

It is human nature to do the bare minimum unless there is reason to do more than that. Giving rewards, especially on the basis of the performance of the employees really encourages them to be the best which they can be. The chief impact of reward on the employee performance is that it serves to bring out the best in them under all circumstances and irrespective of what hurdles stand in their way. If you are not willing to offer them anything more than their salary then the manner in which they work will be boring and below par as compared to the other companies which constantly give perks and rewards.

3. They know that their efforts are not going unnoticed:

Good bosses are those who are able to encourage their employees to do better. If the employees feel like their efforts are going unnoticed, then soon enough, they are going to stop trying to impress you. Once employees start cutting corners and giving up sub standard work it is bound to bring down the company name. An important impact of giving rewards on employee performance is that it assures them that all the hard work they do for the company is being appreciated and the reward is the company’s way of thanking them for their tireless efforts.

4. The employees are willing to go the extra mile:

Why would employees be willing to go the extra mile, if they are not rewarded for their additional hours of work? Extra effort should be rewarded in some way or the other. When a reward is given to the employees it encourages them to continue with the hard work and outdo themselves in the upcoming projects as well. If all employees have this positive work atmosphere where effort is rewarded adequately and recognition given, then all employees are going to strive for perfection at all costs. Giving the rewards to employees will costs the company, but the company in turn would yield much rich dividends in the future.

5. They are encouraged to come up with new ideas:

Companies ought to look at giving rewards as a kind of investment. The more they invest in their employees, the better the employees are going to work. A powerful impact which rewards have on the employee performance is that it encourages them to think about new ideas which are sure to help them bag the reward that week or month. If there is no reward, no employee will try to do anything in an unconventional manner, rather they will be content going things by the book which require minimum mental effort and abilities. Companies should constantly encourage employees to have novel ideas.

6. It ensures that the workers are happy and content:

The primary concern of any company should be to ensure that both the employees as well as the clients are happy. If either is discontent then the company will never be able to thrive. In the past there have been several companies which believed that the best way to keep employees in check was to constantly exploit them and rule them with an iron fist. This was because people were unaware of their rights and freedoms. Nowadays however both men and women are well versed with the law and will not accept anything which is unfair. So a reward given to the employees keeps them content and in high spirits thereby bettering their performance.

7. They feel a sense of belonging to the company:

When employees are given a reward they obviously develop a sense of belonging to the company. It is only when the boss makes every employee feel like an integral part of the company family, that the employees will start delivering top class work. In this way the rewards given to the employees will naturally improve their performance as it will show them how their individual efforts mean so much to the company at large. It makes them feel that all of them should do their bit in order to ensure that things go off smoothly.

8. The do not seek employment elsewhere:

The moment employees feel that their efforts fail to impress the boss at each stage; they are going to start seeking employment elsewhere. All employees whether they admit it or not like to be honored and thanked for the endless work which they are doing. Once the employees do not feel appreciated, not only is that going to negatively affect their performance but it is also going to make them seek employment in other companies where the employees are treated with the uttermost care and concern. So to not lose precious employees, doing this is vital.

9. It increases their self confidence a great deal:

Rewards serve as a validation to the employees that the work which they have done has been of an exceptional quality indeed. Giving a reward to employees serves a dual purpose. It not merely betters the output of the employees but also goes a long way in helping them build their confidence and take more independent decisions in the time to come. If the employees are not encouraged to take matters into their one hands and accept responsibility then they are always going to shy away from dealing with any important matter at hand. Giving rewards is sure to help the employees feel good about themselves.

10. Gives them something positive to look forward to:

Once employee know that if they do their job well, they will be given rewards, they are automatically going to try and knock the ball out of the park. Such a reward will serve as a light at the end of the tunnel once they have worked hard for a project over a considerable period of time. They can use the money given to them in the form of a bonus in whatever way they think perfect. This reward is completely separated from the salary which they are given at the end of the month.

11. It encourages everyone to work better as a team:

Finally, everyone in the company knows that often big projects cannot be handled individually. This reward will encourage them to work as a team so that things run efficiently over all. In all successful companies, employees work as a team and help one another when targets need to be achieved.

These are indeed some of the chief ways in which bonus system do affect employees work performances. If at any point in time, the employees feel that they are not being given their adequate dues for working so hard or that nothing they ever do is noticed and rewarded by the company, then soon they are going to hand in their resignation and apply in other companies where their efforts will be much appreciated as well as rewarded. As a boss you should keep your employees happy at all points in time. After all the work force forms the backbone of any company.