Salary With Bonus: Definition, Types of Bonuses and How To Get One

Your base salary and bonus opportunities make up your annual income. That's why you need to understand what they are, how they relate to one another and how you can earn a bonus to increase your salary. By reviewing the different types of bonuses available to you, and methods for achievement, you could potentially earn more while also improving your work ethic.

In this article, we define what a salary with a bonus is, review the types of bonuses you can receive, discuss why employers give out bonuses and list of few tips for you to apply to your work life to increase your chances of receiving a bonus.

Related: 6 Tips for Your Next Salary Negotiation

What is a salary with a bonus?

A salary with a bonus is when an employer offers employees a base salary with the opportunity to earn additional compensation. A base bonus or minimum amount of compensation an employee will receive is typically displayed in the employee offer letter or contract.

Related: Average Salary by Age

What types of bonuses exist?

There are a few different job bonuses that you, as an employee, might receive from your employer. Here are the types of bonuses employers give out:

• Performance-related

• Commissioned

• Contracted

• Non-exempt

• Situational

Performance-related

Employers give performance-related bonuses to their employees for one or two reasons. The first reason is when an employee meets or surpasses certain goals and expectations that their supervisors have set for them. The second reason is when the company wishes to thank its employees for their combined work ethic.

Example: You receive a $1,500 bonus because of your willingness to work additional hours to launch a successful marketing campaign. Or each person in the accounting department receives a $500 bonus for creating a time-saving payroll system.

Commissioned

A commissioned bonus is a type of bonus that a sales employee receives as a part of their salary. This type of bonus is typically given to employees after they meet set sales numbers, however, employers can also administer commissioned bonuses in response to an entire sales team meeting its sales numbers.

Example: You sell 300 software packages within a three-month period. However, your supervisor set your sales quota for 250. Since you have not only met your sales goals but surpassed them, your company gives you a $1,000 bonus.

Contracted

Those in senior executive roles might receive contracted bonuses as a portion of the salary they agreed upon with their employer. Employers set a base bonus for these employees because the percentage they receive relies heavily on factors such as meeting company revenue targets, contributing to company growth or managing improvements to company procedures.

Example: As CFO, you devise a plan that successfully alleviates your company of its debts and prevents downsizing. You receive a 10 percent bonus of your annual salary of $100,000, meaning a bonus of $10,000.

Non-exempt

Employers typically give non-exempt bonuses to hourly workers as the term "nonexempt" refers to those employees who are eligible for overtime pay. Non-exempt bonuses can be viewed as the time-and-a-half pay that hourly workers receive when working overtime.

Example: You work for a retail outlet during the holiday season when your coworker calls in sick. You have already clocked 40 hours for the week, so your manager offers you overtime pay to cover their shifts. Since you are getting paid double your usual hourly rate, you are essentially earning a non-exempt bonus.

Situational

Situational bonuses include bonuses that employers give to employees around holidays and other events. Employers are more likely to give out random bonuses when the company has maintained or surpassed its financial goals.

Example: Each year, your company gives you and your coworkers a $500 bonus ahead of Christmas, however, because your company had such a great quarter, this year they are giving everyone $1,000 Christmas bonuses.

Related: Discretionary vs. Non-discretionary Bonus: Everything You Need To Know

Why do employers give bonuses?

Employers give bonuses to their employees for several reasons. An employer might want to express their gratitude for an employee's or group of employees' hard work that generated company revenue. They might also give their employees bonuses to maintain or restore morale, using it as a means to motivate employees and providing them with something to work toward.

The ultimate goal of handing out bonuses is to make employees feel valued, increasing productivity and in doing so, create a positive environment for the achievement of company goals.

Related: Sign-on Bonus: Definition and Negotiation Tips

Tips for earning a bonus at work

Here are a few tips you can use to help increase your chances of getting a salary plus bonus at work:

Improving productivity

Improving your productivity could increase your chances of earning a bonus. Consider implementing daily practices into your work routine such as arriving 30 minutes early to get an early start to your day. You could also create a scheduled timeframe to complete your responsibilities, identifying priority tasks and limiting distractions.

Setting goals

Another tip to increase your chances of earning a bonus at work is to set personal goals or milestones that motivate you to outperform your previous results. Challenge yourself to outsell the number of sales you make during the previous week or challenge yourself to improve your verbal and written communication skills to enhance your conversations with coworkers and clients. By setting personal goals, you can apply a deeper sense of purpose to your daily job duties while also improving your work ethic.

Communicating with your manager

By directly asking your supervisor about the likelihood of getting a bonus in the coming months or end of the year, you are potentially increasing the opportunity for a bonus. At the very least, directly asking your manager about a bonus helps set the foundation for an ongoing dialogue about your performance and earned compensation. This also creates an opportunity for you to receive constructive feedback from your manager that can help you with your goal-setting and productivity.