Bonus and commission

A bonus and commission are financial methods of motivating employees by linking part of their pay to performance.

Bonus

A bonus is extra money paid to a worker or a team on top of their usual wage, normally as a reward for hitting a target such as a sales figure or an output level. It motivates because the reward is directly linked to results: hit the target and you gain extra money. For example, a warehouse team that packs 5,000 orders in a month with fewer than ten errors might each receive a £50 bonus. The risk is that a badly designed target can push employees to cut corners or act unethically, such as rushing orders and skipping quality checks. Targets that are too high can also demotivate staff who feel the bonus is impossible to earn.

Commission

Commission is a payment to an employee of a percentage of the value of the products or services they sell. It is common in sales jobs, which often have a low basic wage. For example, a phone shop assistant on £1,000 basic pay per month plus 5% commission who sells £8,000 of phones earns £400 commission, making £1,400 in total. Commission encourages employees to sell more because their pay rises with sales. However, it gives an uncertain income, so a quiet month means lower pay. It can also lead to overly pushy selling or sales that are not in the customer's interest, such as persuading someone to buy a contract they do not need.