A guide to different kinds of bonus

There are numerous ways in which a company can offer a bonus. There are many types of them: annual or lump sum, monetary or non-monetary, variable or fixed, etc. This article will compare many of them.

All the bonuses compared in this article have specific articles developing its description, their pros and their cons. You can find those articles here:

Sign-on bonus

Referral bonus

Retention bonus

Year-end and holiday bonus

Profit-sharing bonus

Commissions

Main characteristics

Bonus	Time period	Value
Bonus	Time Period	Value
Sign-On	One Lump Sum After Joining The Company Or Given In Different Amounts During A Limited Period At The Beginning Of The Contract.	From $150 To $100,000. Usually Matches The Amount Of Money The Employees Are Resigning From Their Former Job.
Referral	One-Time Payment Paid Only When The Referred Candidate Leads To A New Hire Or It Has Been With The Company For A Certain Amount Of Time.	Sometimes Is A Gift Card Or Extra Vacation Days, But 90% Of The Time Is Monetary. Its Worth Can Range From 300 € To 1,400 €.
Retention	One-Time Payment	Usually, It Is A Payment From 10% To 20% Of The Worker’S Current Salary.
Year-End	Yearly Payment	Depends On The Employee’S Base Pay, Years Of Service And Performance.
Holiday	Yearly Payment	From 100€ To 500€, Equally To All Employees.
Profit-Sharing	Yearly Payment	Percentage Of The Company’S Pre-Tax Profits.
Commissions	Fixed Or Lump-Sum Reward Based On The Number Of Sales A Salesperson Makes.	They Can Either Be A Share Of Total Sales Or Of Total Revenue. The Percentage Given Can Be Constant Or Increased If Sales Increase.

Brief bonus description

Sign-on bonuses (also known as singing bonuses) are offered to potential employees if they accept a job offer. Its main purpose is to attract talent. They can also be offered to former workers obtaining a new role. Especially if the new role requires a change of location or a higher workload and more responsibility.

Referral bonus: payment made to a former employee for referring a candidate for employment. Referrals are the most common way for people to find new jobs.

Retention bonus: it is paid to keep a key employee on the job during a crucial business cycle or production period. This may be the case with mergers or acquisitions, leading to periods of instability. It prevents workers from leaving their positions. They are also called ERBs (employee retention bonuses), retention pay, retention packages, or a stay bonus.

Holiday bonus: it is given when the year ends equally to all employees. It represents how the year has been financially for the company.

Year-end bonus: it is given when the year ends and customized to each employee. It represents how the year has been financially for the company.

Profit-sharing bonus: it is compensation received over a set period of time, usually once a year. It represents a percentage of the company’s pre-tax profits. For this reason, the profit is only applied when the company has benefits.

Commissions: they are rewards specifically given to salespeople based on the number of sales they make. Usually, there is a base salary (which amounts to approximately 60% of pay) and commissions on top. Some companies offer all their pay in commissions if they represent a higher percentage of sales.

Target companies for each bonus

Bonus	Sector	Positions	Locations
Bonus	Sector	Positions	Locations
Sign-On	Business Services And Healthcare In The Us.	Management And Executive Positions. Also Salespeople.	Mainly The United States
Referral	Business Services Industry. But 50% Are From Companies With Less Than 100 Employees.	Mainly Sales Professionals And Social Workers.	The Uk Accounts For 66% Of All Referral Bonuses Worldwide. Followed By The Us, Australia, Hong Kong And Canada.
Retention	Companies With Advanced Technology Or Long-Term Projects. Mainly Companies With +20k Employees.	Employees With The Knowledge Or Special Skills Relevant To The Company. And Workers Who Have Completed Vital Training For The Operations.	Mainly The United States
Year-End	Management, Business, And Finance. Also Primary Sector.	Business And Sales Positions.	Worldwide But More Common In Some Countries Such As The Netherlands Or Thailand.
Holiday	Primary Sector.	Construction Labourers.	Worldwide But More Common In Some Countries Such As Ireland, Poland, Or Mexico.
Profit-Sharing	Business Services, Followed By The Financial Industry.	Anyone But Just Senior Positions.	Mainly The United States
Commissions	Usually, Real Estate Companies. Also, Telecommunications And The Business Services Industry.	Sales Positions.	Mainly The United States And France.

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