How do I decide on bonuses?

 Hi, I’m Donna Obstfeld with DOHR. I’ve got another one of our 52 top tips that I’m sharing with you today, and it’s the two of spades. When we talk about the spades, it’s all about pay and reward. And today, we’re talking specifically about bonus. 

Bonus is usually linked to a company or individual performance. Care should be taken to ensure that the company is not committed to pay a bonus, regardless of company profit or loss. Eligibility to join a bonus scheme should be in the contract, but the details change on an annual basis with new targets being set and communicated to the workforce. Decisions need to be taken on how regularly it will be paid out, what the criteria are for payment, and also whether or not it’s pensionable. 

A bonus can be a great way to incentivize particular behaviours that you require as a business. It’s different to commission, and it’s generally more applicable to more people in the workforce. But a bonus doesn’t put a fixed amount of money onto your bottom line, and that’s why companies really like to use the bonus, because it’s much more flexible than adding more pay to people’s base salary.