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</a>  There&#8217;s something quite fair about paying your employees a decent base wage and then giving them a bonus on top which is dependent on how well your company does over the course of the year. It helps align incentives; it also means that when the company makes lots of money, its employees share in the good fortune to a greater degree than they would otherwise. Conversely, it gives the company a certain amount of flexibility to cut annual payroll costs when things get tough. None of this has anything to do with performance reviews; it&#8217;s just a way to make a large part of a company&#8217;s expenses a bit more efficient.