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Three top tips for paying performance bonuses

by , 23 May 2016
Three top tips for paying performance bonusesPerformance bonuses can be very beneficial to any company as they encourage employees to work harder through a reward system. In other words, your bonus will be based on the performance of an employee. And should he meet a particular target, you'll reward.

Now it is only once an employee has reached his targets that you'll reward him, and that's why so many employers favour this over fixed bonuses.

So should you yourself be considering performance bonuses in your workplace, here are three top tips you need to know...


Do you have a paper-shuffler working for you?

You know that person…

·         Always busy but never meets deadlines…
·         Always making excuses for why he doesn't meet company targets…
·         He doesn't meet his KPI's…
·         And he's constantly making costly mistakes…

The next logical step is to get rid of him and get someone who can do the job. But watch out, that could cost you BIG at the CCMA!

So what can you LEGALLY do?


The three tips for paying performance bonuses are…


Ensure that the employee fully understands his job description, as well as all the performance criteria, at the beginning of the performance assessment cycle.

That way he'll know exactly what's expected of him. And when the time for paying out bonuses comes, he won't have any false expectations from never understanding what was expected of him.


Make use of a standard performance evaluation system, and apply it consistently among all your employees.

The last thing you want is to discriminate against any employee because you applied your evaluation system for performance bonuses inconsistently.

So to prevent this, you need to ensure that if you pay some employees performance bonuses and others not, you have justifiable reasons for doing so – namely your performance criteria.

CAUTION: You may not, in any way, link your performance criteria on grounds such race, age, gender, marital status, or any other discriminatory ground for that matter.

Don't set your performance criteria so high!

By setting your performance targets at an unreasonable level, employees will actually feel more demotivated than ever before.

So keep them realistic and achievable to ensure that employees are working at their best.

*To learn more on performance bonuses, page over to Chapter B 03 in your Labour Law for Managers handbook, and Chapter B 02 in your Practical Guide to Human Resources Management handbook today.

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