Rewards: Varieties, Benefits, Drawbacks
In the modern business landscape, bonuses have become a common form of compensation for employees, beyond their regular salary. These incentives, often annual, can take the form of cash or non-cash rewards, such as extra days off.
Across the globe, the practice of offering bonuses varies. For instance, in Poland, while employers are required to provide legally mandated benefits like paid leave and social insurance contributions, there is no indication of a legally required bonus payment system for employees. On the other hand, in Indonesia, bonuses are a common part of the compensation structure.
Indonesian companies often evaluate and assess each employee's performance to determine the nominal bonus. Common types of bonuses in Indonesia include achievement bonuses, retention bonuses, tantième, and holiday allowances. An achievement bonus, or performance-related bonus, is given based on employee performance, while a retention bonus serves as an incentive to prevent employees from leaving, especially key talents. Tantième, on the other hand, is an incentive given to directors and commissioners based on the company's performance.
Holiday allowance is an extra incentive given to employees who have worked for a certain period, typically during Eid and Christmas in Indonesia. Profit-sharing bonuses are given when the company's profit equals or exceeds the target, and are given to all employees, not just top performers.
Bonuses can be a powerful motivator for employees to maintain superior performance. They can help retain key employees and attract quality new ones. However, they can also increase competition among employees, potentially damaging interpersonal relationships. Some employees may not be motivated by bonuses and may prefer a supportive work environment.
Companies offering profit-related bonuses need to develop targets for revenue and expenses. Spending more money on employees to pay bonuses can reduce a company's internal capital. Companies may give large bonuses to all employees in profitable years as appreciation for hard work and dedication. Conversely, employees may become disappointed if there is no bonus, reducing their enthusiasm for work.
It's important to note that bonuses are optional and not every company provides them. Some companies may give bonuses only to individual employees who perform well as a form of appreciation and motivation for others.
In conclusion, while the practice of offering bonuses varies across countries, they remain a significant part of the compensation structure in many places. Companies must carefully consider the potential benefits and drawbacks before implementing a bonus system.
