What is

Performance Bonus


A performance bonus is a non-mandatory monetary award for employees who exceed specific expectations and goals.

What Is a Performance Bonus?

A performance bonus is a non-mandatory monetary award for employees who exceed specific expectations and goals.

Performance bonuses can be awarded to an individual or a team who work together towards a singular goal.

Common Types of Performance Bonuses

There are different types of performance bonuses common throughout the world.

Discretionary bonus

A discretionary bonus is given to employees who have exceeded expectations. This is often used to incentivize top performance. There aren’t usually strict guidelines and criteria as to what qualifies an employee to receive a discretionary bonus. Employers often give these bonuses without notice and employees don’t generally expect them.

Non-discretionary bonus

Unlike discretionary bonuses, non-discretionary bonuses are made known to employees. Similar to non-discretionary bonuses, though, these are also used to incentivize employees to boost their performance and meet company goals. 

Spot bonus

This type of bonus is given to an employee or employees out of the blue — on the spot. There’s no clear criteria as to what makes an employee eligible for a spot bonus; however, it does have to do with company or employee performance.

Mission bonus

Mission bonuses, also referred to as milestone bonuses, are rewarded when employees accomplish a set amount of tasks, specifically ones that are important or have tight deadlines. 

Profit-sharing bonus

When a company achieves success, employees receive profit-sharing bonuses. With this type of bonus, organizations will divide a percentage of net profits with workers. This is an indication of appreciation for employees and their diligent effort.

There are many advantages to businesses offering performance-based bonuses. Giving hard-working employees bonuses and rewards shows appreciation and gratitude. 

When an employee realizes they can earn a reward on top of their customary compensation, it might increase their performance and time with the company.

Performance bonuses aren’t mandatory, but they are common, especially depending on the industry. When hiring employees abroad, pay them their bonuses correctly and safely. A great way to do so is with global payroll services. Borderless can help you do that. 

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