Bonus

By Entrepreneur Staff

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Bonus 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.

More from Employee Benefits

Cafeteria Plan

An employee benefit arrangement allowed by IRS Code Section 125, under which employees are allowed to pay for certain employee benefits on a pre-tax rather than an after-tax basis.

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Compensation

In financial terms, the salary and wages you pay to your employees for the work they do. Other, nonfinancial forms of compensation can also be offered to attract and retain staff.

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Benefits

A product or service's customer-oriented strengths; statements of a valuable product or service feature, with an emphasis on what the customer gets from the products

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Bonus

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

See full definition

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