Whether used proactively to influence employee behaviour or retrospectively as part of a reward package, bonuses and incentives can carry a number of benefits for employers and employees. The success of any bonus or incentive scheme, however, is based on an understanding of the context in which they operate and an appreciation of how individuals can respond differently to the same stimulus.

This factsheet explores the various types of bonuses and incentives, the trends and shifts in the application of bonus and incentive schemes, and the benefits and potential drawbacks of bonuses, cash and non-cash incentives. It provides an insight into how different schemes suit a variety of contexts and what to consider when designing and operating such schemes.

CIPD viewpoint

What are bonuses, cash incentives and non-cash incentives?

Background and rationale for bonuses and cash incentives

Types and coverage of bonuses and cash incentives

Payment levels and recent developments in the use of bonuses

Background and rationale for non-cash incentives

Designing and operating non-cash incentive schemes

References

Useful contacts and further reading

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