Useful Info

A compensation system that provides rewards differentially based on the achievements of organization members. In other words, it is a form of pay given according to the evaluation of work performance or efficiency achieved by individuals or groups, also called merit pay or efficiency pay. The main purpose of performance bonuses is to increase productivity. Performance bonuses can be largely divided into individual performance bonuses and group performance bonuses. Performance bonuses are in contrast to fixed pay, which is provided as a fixed amount per unit of time engaged in work, regardless of individual workload or performance. In countries like Germany and Australia, performance bonuses based on performance evaluations are differentially paid within a range corresponding to about 20% of the annual salary level, and approximately 20% of the total compensation is used as performance bonuses. For the performance bonus system to succeed, objective measurement of performance must be possible.