Bonus is a payment given in addition to what is normally due a person, particularly an employee. There are two main kinds of bonuses, incentive bonuses and year-end holiday bonuses.
Incentive bonuses encourage employees to increase their production. In a steel mill, for example, each member of the crew of a blast furnace may receive a bonus if their output exceeds a certain amount. Employees of some companies may be given an incentive bonus for completing a job within a specified period. Many salespeople receive such bonuses if their sales during a period exceed a certain amount. Managers often receive them when company sales or profit targets are reached or surpassed. Some labor unions oppose incentive bonuses. They claim that if a worker earns a bonus, the employer will reduce the time allowed for the task involved. The employee would thus have to work harder for another bonus.
Year-end holiday bonuses, sometimes called Christmas bonuses, are given annually to the employees of some companies. In most cases, the amount of such bonuses depends on how long a person has worked for the firm. Many employers believe year-end holiday bonuses help reduce the number of people who resign. Such bonuses, as a result, help decrease the expense of hiring and training new employees. Some employers also believe these bonuses reduce employees’ demands for higher wages.
In another kind of bonus program, called profit sharing, employees receive a percentage of the company’s profits (see Profit sharing ). The United States government and many states have given bonuses to war veterans as partial compensation for the higher wages they might have earned as civilians.
Some stores offer extra goods or services to customers who purchase certain products or who shop during a specified period. Such goods and services are considered bonuses.
