Performance bonus
Also called: annual bonus, variable pay
Common structures
Three patterns SMBs use:
- Company-performance bonus: the bonus is paid (or paid at higher %) when the company hits annual revenue, profit, or other agreed targets. Often used for non-sales roles where individual quotas don’t apply.
- Individual-performance bonus: a target % of base, paid based on individual review. Subjective by design; works only when performance reviews are taken seriously.
- Hybrid: a portion company-tied, a portion individual. Most modern setups use this.
A typical target bonus for a mid-to-senior non-sales role in European SMBs is 10-20% of base; for sales, see OTE.
What goes wrong
The common failure modes are well-documented:
- Goalpost moving: targets get revised mid-cycle. Employees feel cheated; trust erodes.
- Pool that doesn’t fund out: company misses the threshold, bonus pool is empty, employees who hit individual targets get nothing.
- Performance reviews that all rate “meets expectations”: bonuses cluster at target; the variable doesn’t actually differentiate. Becomes a delayed base.
What works
- Clear, written, agreed-in-advance criteria. The employee knows what hitting target looks like and what exceeding it looks like.
- Same criteria for the whole team or band. No special bonus structures per person; pay drift hides in there.
- Predictable payout timing. February for the prior calendar year is standard for European SMBs.
Where Join fits
Offer letters in Join surface bonus structure (target %, basis, payout timing) so the candidate sees what they’re signing up for, not “discretionary bonus, terms to be agreed.” See the features page.
