Leveraging bonus payouts for better performance

EMPLOYEES often view bonuses not only as financial rewards but also as a reflection of their value to their organisation. A bonus perceived as inadequate or unfair can harm morale, reduce trust in management and foster resentment among colleagues.

This phenomenon, known as the “contrast effect”, explains how employee’s expectations – based on verbal praise, past payouts, or industry benchmarks – can make a lower-than-anticipated bonus feel like a loss even if it is objectively generous.