Individual bonus scheme
An individual bonus scheme links extra pay to a particular employee’s measured performance. It can strengthen the connection between effort and reward where individual output is identifiable and controllable. The scheme needs a clear baseline and safeguards for quality, safety and cooperation. Calculate the employee’s earnings using the actual stated formula rather than importing a different time-saving or piecework convention.
Worked example
An employee earns $500 basic pay plus $2 for each acceptable unit above 200. Producing 230 acceptable units gives a $60 bonus and total gross pay $560.
Common mistake
A target based only on quantity can reward defective output unless acceptance and quality conditions are defined.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |