The question of interest is whether there is a difference between employee bonuses and employee incentives. Employees will call either a “bonus” but rest assured there is a difference to both the employee and employer.
When an organization is doing well, well-intentioned owners want employees to share in the success. Employees will receive bonus. Here is the problem. The employee does not know exactly what she or he did to contribute to the success. If the employee doesn’t know what she or he did right, how will the behavior be repeated? The second problem is that bonuses tend to be equal regardless of how much individual employee did or did not contribute to the company’s success. The bottom line? The bonus is nice momentarily but is not a good investment for the employer.
Better for the employer and employees are incentives. When an employee receives an incentive “bonus”, they have earned it. They understand what they did and how it helped the company. The company benefits because the employee efforts are aligned with the organization’s goal. A bonus is a give-away and an incentive is an investment.
I agree with your perspective. In today’s economy, money is a motivator no matter which way you look at it. Your organization pays you to work. Compensation, in whatever form, is recognition for the effort put forth, but which one is the most satisfying? There is a distinction between bonus and incentive and employees should understand how their performance is linked to a reward. The bonus speaks to the organizations performance as a whole. The incentive represents individual performance. When an employee receives an incentive, it allows the person to put a value on their individual contribution to the organization and increases their motivation to perform.