Definition: A monetary payment made to an employee over and above their standard salary or compensation package .

Bonuses are one of the ways employers reward their employees for a job well done. And offering regular, significant bonuses is a way to keep your best people from looking elsewhere for a job.

Bonuses are usually determined as a percentage of annual salary, though giving all employees the same monetary bonus is also an option. Much depends on your corporate philosophy and goals. A growing number of employers are reducing salaries and increasing the portion of compensation that's performance-based, such as bonuses. Through this approach, companies can more directly and immediately reward outstanding achievement. And many firms are basing bonuses on the performance of not just the employee but the company as well in order to reward both personal and team accomplishments.

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