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Types of bonus
Here are some common types of bonuses that businesses offer to their employees:
Profit-sharing is a type of bonus where employees are given a percentage of the company’s profit. The companies pay this quarterly or annually depending upon their bonus plan. Some companies make a profit-sharing mark and when they reach that threshold, they distribute profit as a bonus to their employees.
A spot bonus is awarded for exceptional performance on a certain task. For instance, you can get this financial reward when you go above and beyond your normally assigned duties. Spot plans are usually meant for individuals and not for teams.
The name for this program comes because a supervisor or manager gives the bonus “on the spot.” This is not a time- or goal-based plan. The amount varies depending on the company and the act that prompted the bonus.
A non-cash bonus award can come in a variety of forms, including a certificate, a trophy or a special intra-company award feed. For example, your company could give you an Employee of the Month award or trophy. Supervisors can be in charge of nominations for non-cash awards, though in some bonus structures, companies have an intra-company award feed where fellow employees nominate coworkers for awards. This is an ideal way to foster teamwork in the workplace.
A company gives out a referral bonus to current employees for referring new hires. Some companies award the bonus when your referral completes their 90-day probation period. Other companies give a referral bonus once you have referred a certain number of candidates. This bonus structure can help companies recruit new talent quickly when they experience a rapid rate of growth or when new departments have opened up.
The amount of a referral bonus can vary depending on the policies of a company. Somewhere it is a flat amount for every role and somewhere it depends on the job role and the skills required for the job. If the skills are harder to fill, then the bonus amount can be very attractive.
Some companies give a signing bonus to new employees when they first accept the job offer. Different companies have different rules for releasing the signing bonus. Some companies give it immediately after the completion of the onboarding process, while some firms pay it after a few months. Also, most employment contracts include a clause that states the employee has to return the entire joining bonus if they leave the company within a defined number of months of joining.
Companies use this type of bonus structure to attract employees with hard-to-find skills and when the unemployment rate is low to attract more eligible new hires.