Benefits of Performance Bonus: Employee Recognition
Rohit Singh VP of Customer Engagement Schedule Free Consultation
  • In a competitive hiring market, presenting your employees with a performance bonus can be an effective motivator. Whether it’s about acknowledging an individual performance or a company-wide success, you can bolster your employee retention and drive productivity with a comprehensive employee recognition strategy.

    Why do you need to offer a performance bonus to your employees?

    Research from Robert Half proves that three-fourth of senior managers believe that providing a year-end bonus to employees motivates and improves their performance.

    In a 2015 survey by WorldatWork, 94% of the respondents stated that their organizations offered short-term employee incentives, while 53% provided long-term incentives apart from regular pay.

    These metrics show that giving performance bonuses to employees has been an integral part of every successful organization.

    Correlation of performance bonus and business growth

    Every manager would agree that a motivated and productive workforce is essential for a business’s success – regardless of its size, industry, and corporate strategy.

    However, the question is – how to effectively motivate them?

    By offering incentive-based bonuses, is one way to boost the morale and performance of your workforce.

    It is of two forms: bonuses offered based on individual performance and bonuses offered as organization-wide incentives.

    Such rewards may work in ways managers want them to; however, there are times when performance incentives can backfire, leading to the development of aggressive behavior among your workforce.

    On the brighter side, the link between performance-related rewards and employee well-being indicates that such incentives are a positive trade-off to ensure organizational success.

    With profit-related pay, you can achieve a higher level of employee participation leading to a greater feeling of job satisfaction, organizational commitment, and trust in management.

    Six Key Benefits of Performance Bonus for Your Employees

    With employee incentives becoming the norm of every successful business organization, here are the six key benefits you can get by providing a performance bonus to your employees.

    Motivation boost that drives productivity

    The primary factor of using an employee incentive is to urge your workforce to reach higher achievement levels.

    Incentive plans that reward your employees when they reach a predetermined objective are a great source of encouragement and appreciation. It also gives your employees the direction they can aim for and achieve growth.

    Additionally, employee recognition incorporates a sense of satisfaction among your workers, who will now go beyond their routine protocol to achieve their business targets – resulting in higher productivity and profits.

    Incentive plans are self-supporting

    Mostly, incentive plans are attached to the earnings of an individual. It means – the more revenue an employee generates for a company, the higher the performance bonus he gets through the incentive plan.

    It means that your business will not have to incur the financial burden of running an employee recognition program.

    When your employees achieve their targets, they will generate revenue for your business. A share out of this profit will be the performance bonus for your employees.

    More loyalty towards your company

    Employees who work hard for your business and get a performance bonus in return are more likely to be loyal towards your company. It is especially true if your incentive plans have a residual value.

    For instance, if an employee gets a reward for signing up a new client with a residual bonus for every subsequent purchase made by the client – it will create earnings that will last the entire life-cycle of their employment

    Thus, creating a strong professional relationship between the employee and the employer.

    Reduced employee turnover

    Your employees will start to look for new employment opportunities if they feel underappreciated or neglected in your company.

    A performance bonus plan can be an excellent employee recognition method, showing you appreciate their contribution to your business.

    It will also mean that your employees will love their association with you and not look elsewhere. It will save both time and resources for your firm in recruiting new hires.

    Additionally, you can also attract top talent in your domain to work for you by creating an effective incentive strategy.

    Fostering strong work relationships

    When your employees work together to achieve your business objectives and get team-wide incentives in return, it creates healthy mutual respect and team spirit within your organization.

    It strengthens the relationships between coworkers, colleagues, and managers. With a unified workforce, your business becomes more productive and generates higher profits.

    A unified workforce also helps individual employees who cannot meet their goals by motivating and assisting them.

    Enhances succession pipeline

    When your employees work hard to achieve performance bonuses, they also improve their skills in the process.

    Whether they improve their skills through experience or a training program, they complete their tasks more effectively.

    For your company, this process provides a big benefit of strengthening your candidate pool for succession – allowing you to prepare high-potential employees even if there’s no immediate opportunity for advancement.

    How NextBee helps with Employee Recognition Program?

    In a competitive market with abundant options for your employees to find new work opportunities, your organization needs to retain your skilled workforce through an efficient employee incentive program.

    NextBee provides advanced employee incentive planning and implementation services that help you get commitment and engagement from your workforce.

    With our suite of features, we enable you to track every process; and offer bonuses through tiered reward systems that enhance your workforce’s productivity and skillset.


    Employee recognition forms the crux of every successful business organization. Offering a period performance bonus to your employee boosts their morale and productivity. It helps you achieve business growth and build a healthy work environment within your organization.


Align Your Company, Your Teams, And Your Individual Employees To Foster A Company Culture Rooted In Success.



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