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The Definition of an Incentive Bonus

The Definition of an Incentive Bonus thumbnail
Everyone loves a bonus.

An incentive bonus is typically a reward that has some financial worth and is given to employees for performing a task at or beyond expectations. In the workplace, incentive bonuses can significantly raise company morale.

  1. Goals

    • An incentive bonus is generally a tool used to reward an employee for reaching a specific goal. A company may offer an incentive bonus for meeting quarterly sales quotas, reaching a target number of referrals or cutting operational costs, or for a host of other reasons.

    Types

    • The are a number of different types of incentive bonuses. The basic incentive bonus is a lump sum of cash. Other incentive bonus types include stock options, gift certificates, a paid trip or additional paid vacation time.

    Morale

    • An incentive bonus can boost worker morale and get employees excited about working and meeting specific goals, because they are excited about bringing more money home.

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