When it comes to productivity at work, a question of motivation is of a great importance. The system of bonuses to employees exists hundreds of years.
Today the law says nothing about bonuses for workers, so it is an employer`s decision whether to pay bonuses or not.
In this post we will talk about bonuses for employees in modern Nigeria. We will study three common types of bonuses: Christmas bonus or 13th cheque, performance bonus and productivity bonus.
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The 13th cheque or Christmas bonus
Initially, the 13th cheque bonus was a payment of gratitude by the employer to the employee in recognition of a job well done, or we might say, going the extra mile. But over the years most employees have come to expect the payment of the 13th Cheque as a right or as a condition of employment. A curious fact that proves it is that today at job application interviews, most applicants ask whether there is a 13th Cheque bonus.
So, they expect for this bonus regardless of whether the job is well done or not. They see the payment of Christmas bonus as a condition of employment.
If there is a situation that an employer is unable to pay a 13th cheque, it is highly recommended to inform the employees about that at least six months in advance. Some managers may claim that they don’t know six months in advance that they will be unable to pay the bonus, but we have a believe that by midyear they must have some idea of what the profits will be like at the end of the year.
The employer must assume that many employees count the amount of the bonus into their normal household budget during the holiday season, and they depend on the bonus to pay for the annual holiday, Christmas presents and so on. So, it`s unfair to suddenly inform them at the last minute that there will be no bonus this year, that is something that should be avoided.
Our advice to the employers is to examine their policy regarding the 13th cheque and should revise this so that this type of bonus is paid only to those employees who genuinely do the job well.
The performance bonus
The performance bonus is a form of additional compensation paid to an employee or department as a reward for achieving specific goals or hitting targets. A performance bonus is usually paid after evaluating the results of a project completed by the employee over a specific period.
Some companies don`t offer performance bonuses, and some of them often define the maximum amount that an employee can receive for exemplary performance. The main thing is that this bonus is given for performance above expectations, so employees are not automatically entitled to it.
It is a quite usual practice when performance bonuses are given to an entire team or department if, for instance, some sales figures were met, or if the actions of that group were estimated as outstanding ones.
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Productivity bonuses are also quite old. They appeared in the days when manufacturers rewarded hourly workers for speeding up their work pace. For example, a worker who finished rolling 100 packages of shrink-wrap would earn a productivity bonus because an increase in personal efficacy meant a greater rate of output – and more profit – for the company.
Nowadays productivity bonuses no longer concern only hourly workers; they are used throughout the pay scale as rewards for performance and efficiency.
Productivity is important to both production businesses and services. As the economy has shifted more heavily toward services, productivity measures evolved to encompass the work of professionals and executives whose work does not result in the production of tangible or measurable goods. But although productivity bonuses can be good for both employers and employees, productivity and efficiency are not the same thing.
Employers who want to improve overall performance and profits may offer gain-sharing bonuses, a bonus program by which employees or groups of employees are rewarded for determining and implementing ways to save the company money that are consistent with the company’s business objectives.
Gain-sharing can include profit-sharing plans, restricted stock plans, or management-by-objective programs, all of which tie personal growth to company growth.
“There is more productivity to be gained by positively motivating people, than by simple pay-for-performance”, – said an executive at Sealed Air Corp., a worldwide packaging firm headquartered in New Jersey. He supports the practice of moving some of the decision-making way down into the workforce.
“If a group of workers on line get together to discuss and decide their own solutions to problems, the company will often see a resultant increase in productivity, due to the workers’ investment in the larger operations of their company”, – he said.
Similarly, if the company rule is that a rejection rate of 5 percent is acceptable, but the department consistently achieves a rejection rate of only 1%, then a production bonus would be in order.
It must be admitted that the additional production and the reduced rejection rate can only mean good management within the department, and it can only mean a genuine interest in the job by the employees, thus generating additional profits for the shareholders.