The key design feature of a bonus schemes is to motivate employees to achieve key business objectives.  The goals may be set at individual, team or business unit level. 

Reasons for introducing a bonus scheme include:

• To improve business performance, e.g. sales or profits
• To provide focus on key objectives, e.g. customer service or quality
• To increase employee motivation by creating establishing linkage between contribution (input) and pay (output)
• To improve alignment with shareholders because employees share in business success
• To support organisational change
• To reward staff when the business is doing well but without permanently increasing the annual pay bill.