In recent years, many companies have moved away from cash bonuses: according to a survey from Bank of America, only 29% of employers planned to offer cash bonuses in 2019.

But even if companies do offer cash bonuses, they also vary widely in how they award them and how much they give. Some businesses choose to give an employee a percentage of their salary, whereas others offer a small, flat amount, like $50 or $100, sometimes varying based on the business's performance that year. Some employers base their bonuses on how long an employee has been with the company or their yearly performance.

"I pay my bonuses out based on two factors: the employee's overall performance review and the number of years the individual has been with the business," said Laura Fuentes, operator at Infinity Dish. "I start annual bonuses at a minimum of 2% for the first year and max out at 6%."

"In some industries, such as finance, bonuses are closely tied to employee performance and can vary dramatically within and between teams," Andrew Schrage, CEO of Money Crashers, explained.

"Elsewhere, all employees of the same rank receive the same bonus. Amounts can vary from token-sized (think $25 or $50 gift cards) to amounts greater than the employee's total regular compensation. The latter is more common among highly compensated executives and financial professionals."

However, companies should understand that paying their employees a year-end bonus isn't charity. The biggest benefit is that it makes people happy. It shows workers that their bosses are thinking about them and consider them valuable to the company.

Bonuses also ensure that employees are rewarded for their hard work, which decreases the possibility of burnout. Happier employees are simply more likely to stay with the company over the long term, decreasing costly turnover.

When employees are satisfied with their job, they're often more engaged and productive. A 2019 study by Oxford University found that happy workers are 13% more productive, and a good way to make them content is through extra compensation and other rewards.

Besides, if bosses choose to tie bonuses into yearly performance or goals, employees can be highly incentivized to hit those goals throughout the year if the payback seems worth it.