CERA's Bonus Scheme Analysis: Performance-Based Incentive Report

This report analyzes CERA's bonus scheme, focusing on the issues arising from a fixed bonus structure that fails to adequately reward employee effort and achievement, leading to demotivation and impacting organizational performance. The report identifies problems associated with the bonus scheme, such as its ineffectiveness in improving company performance and poor employee satisfaction. It proposes performance-based bonus schemes as a solution, emphasizing the positive impact on employee motivation, job satisfaction, and retention rates, supported by research from various scholars. Furthermore, the report suggests a multi-factor bonus scheme, which considers multiple factors like objectives, goals, and employee satisfaction, measured using a balanced scorecard, to provide a comprehensive approach to incentivizing employees and achieving organizational goals. The core argument is that by aligning bonuses with performance, CERA can enhance employee motivation, improve company performance, and achieve desired business outcomes, thereby providing a competitive advantage. The report cites several academic sources to support its claims.

CERA's Bonus Scheme

Bonus scheme
The bonus is defined as the amount of incentive which is given by the employer to the employee
and it is the portion of profit which is distributed in order to increase the productivity within the
particular time period. The bonus can act as a tool which plays a vital role in achieving the
desired outcomes of the company. The bonus scheme is developed by considering the wide range
of factors which are affecting the performance of the company. There are various problems
which are associated with the bonus scheme such as ineffectively of the scheme on improving
the performance of the company, improper team management, poor customer service,
demotivated employees and others.
Problem
The aim of the bonus scheme is to provide benefits to the employees but the issue is that the
employees are getting fixed bonus and their work pressure and achievements are higher than the
bonus received by the employees per year due to which employees are demotivated which
impacts on the organizational performance. Other problems related to the bonus scheme include
ineffective bonus scheme, the poor performance of the company and others.
Proposed solution
According to the researchers, it is stated that the bonus system should motivate the employee
who improves the job satisfaction and security within the particular time period and it improves
the retention rate of the employees (Nido, et al., 2015). The solution to the problem is that the
company must start performance-based bonus in order to motivate and satisfy the employee by
paying them on the basis of their performance within the specific time period. According to the

Francis Boachie et, al., 2011 the performance-based bonus helps to achieve the organizational
goals and objectives through motivating the employee within the particular year (Gao et al.,
2014). According to the Meyer et al., 2007 the perception of the employees regarding the
performance-based bonus acts as a motivator and build the positive attitude in employees
towards the achievement of organizational goals and objectives within the particular period of
time. According to the Perry et al., 2009 there are various factors which are affected from the
performance-based pay such as level of trust, effective performance approach, adequate rewards
and others (Choi et al., 2015). But according to the Kellough and Selden et al., 1997 the
implementation of performance base bonus is unfair because the perception of individuals varied
from one to another which impacts on the motivation level of an individual whereas the Fletcher
and Williams et al., 1996 states that the performance-based bonus improves the organizational
performance by improving the efficiency of an individual through satisfying the employees in
monetary terms (Perry et al., 2016). The performance-based pay is the solution of the proposed
solution in order to motivate the employee through performance-based bonus which directly
improves the organizational performance within the particular time period.
The multi-factor bonus scheme is another proposed solution to the problem which effects on the
performance of the company. The multi-factor scheme considers various factors such as
objectives, goals, employee satisfaction, employee retention and others. It is the bonus scheme
which considers all the factors which impact on the performance of the employee such as
employee performance which is measured by using the balance score card. The multi-factor
bonus scheme provides the bonus on the basis of performance of the employee within the
particular period of time. It considers the contribution of an employee in achieving the
organizational goals and objectives within the desired framework (Goodman et al., 2013). There

is a direct relationship between the performance of the employee and bonus provided to them.
The bonus is paid on the yearly basis which considered various factors which impact on the
performance of the company. The multi-factor bonus scheme helps to improve the performance
of the employee which impacts on the organizational performance, and that directly helps in
achieving the desired outcomes of the company by providing a competitive advantage to the
company. The aim of applying the bonus scheme is to achieve the organizational goals and
objectives by improving the performance of employees through financial motivator. It helps to
resolve the problems related to the bonus scheme by considering the various factors which
impact on achieving the business goals and objectives.

References
Gao, H., & Li, K. (2014). Large shareholders and CEO performance-based pay: New evidence
from privately-held firms. Available at SSRN, 2047997.
Nido, M. B. (2015). ASSESSMENT OF THE PERFORMANCE BASED BONUS (PBB) IN
THE PUBLIC HEALTH CARE SYSTEM: A CASE STUDY (Doctoral dissertation).
Choi, S., & Whitford, A. B. (2015). Employee Satisfaction in Agencies with Merit-Based Pay:
Differential Effects for Three Measures. Available at SSRN 2553622.
Goodman, S. F., & Turner, L. J. (2013). The design of teacher incentive pay and educational
outcomes: Evidence from the New York City bonus program. Journal of Labor Economics,
31(2), 409-420.
Perry, W., McIlwain, M., Kloezeman, K., Henry, B. L., & Minassian, A. (2016). Diagnosis and
characterization of mania: Quantifying increased energy and activity in the human behavioral
pattern monitor. Psychiatry research, 240, 278-283.