Employee Bonuses as Motivating Incentive

'Bonuses' the word has the ability to make our hearts smile. It acts as a motivator, re-charger, it shows the employees that management cares and appreciates their contribution. Even small amount as bonus means a lot so the employers shouldn't really rule out bonuses just because they seem short on cash. Bonuses can be given to the deserving  employees at any time of the year. But if given at right time, it has greater impact. Bonuses distributed soon after meeting the targets, closing the deal, completing a special project means a lot more than if it is given after an year. Management should use distribution of bonuses as a motivational tool. People with same level of competency and skill-set should be given equal bonuses. In the companies normally a peer group is given the same amount as Bonus to avoid heartburns. The employees who did not lead, or did not close the deal too deserve employee bonuses. They are the ones who are not in the lime-light but their efforts need to be acknowledged too.Employee bonuses can be of  many types. If your management decides to give you certain share of company profits, it is categorized as 'Profit sharing Bonus. If the management decides to relate bonus to individual performance, it is known as  'Individual incentive'. If it is the team's performance that earns the bonus, it is called 'team incentive' or 'group incentive'. Then most manufacturing plants have 'Gain sharing Programmes' that pay bonuses on improved product quality. It also rewards productivity. There are 'Mission bonuses' or 'Task bonuses' given to the employees of the team that completes an important project. If there is uncertainty about an employee's continued employment at the company, 'Retention Bonuses' are given especially when companies merge or are acquired. If the project needs that particular employee, he is entitled to a retention bonus.For managements Employee bonuses are a tax saving clause. The bone of the contention is which department gets how much and every department pitches for the biggest share of the bonus pie. The best way is to pay bonus based on salary. So avoid burning of hearts there should be clear parameters that are measurable, based on which the bonuses should be paid. Ideally performance linked bonus is a good idea and it should be calculated against measurable goals achieved.Employee bonuses are ongoing costs. It is not like one year the management decides to give it and in the other tries not to and succeeds in that. One shouldn't forget that the management gets hefty deduction on amount given away as bonus. There is one catch though, Bonuses given to partners, sole proprietors and LLCs-Limited liability company's members are not deductible because partners/ owners/members come under the category of being self-employed. So there isn't anything to be gained as deduction if the owners decide to gift hefty employee bonuses to their own selves. Making bonuses work for the company is an art, top management should master it.