At the end of this article, discover how RD Saúde — the Brazilian holding company behind the Raia and Drogasil networks — transformed its performance bonus program and achieved high levels of employee engagement.
The Purpose of Performance Bonus Programs
The Performance Bonus Program — also known as Variable Compensation or Profit Sharing — was created to serve as a catalyst for organizational performance. However, in many companies, it ends up being reduced to an annual ritual: the “bonus payment day.”
The problem is that when a performance bonus program becomes an event rather than a continuous process, it loses its true power to guide behaviors, reinforce purpose, and connect everyone to the organization’s results.
According to the WorldatWork Total Rewards Survey 2024, only 36% of companies report that their employees clearly understand how their individual goals contribute to overall results. In addition, less than 30% remember the incentive program outside the payout cycle. This explains why many variable compensation plans fail to generate continuous engagement — they generate only an expectation of reward.
Why does the “bonus” topic disappear throughout the year?
According to recent studies from the Aon Executive Compensation Review 2025, three factors explain this recurring disconnect:
- Lack of follow-up rituals — in other words, managers do not hold regular check-ins on goals, progress, and results.
- Weak executive communication — where the “why” behind the performance bonus program, meaning its purpose and impact, is not reinforced frequently.
- Misalignment between business cycles and incentive cycles, meaning that the performance bonus program often fails to keep up with the real dynamics of the operation.
This lack of ongoing dialogue causes employees to lose their emotional connection to the program. When that happens, the performance bonus program stops being a cultural tool and becomes merely a financial mechanism.
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The Manager’s Role: Purpose and Continuous Direction
As Edward P. Lazear and Kevin J. Murphy point out, the effectiveness of an incentive program is driven more by the perception of fairness and clarity than by the monetary value itself. In other words, it’s not enough to pay well — it is essential to provide constant visibility into the impact of both individual and collective performance.
Managers who maintain monthly or quarterly performance routines — with feedback and transparent communication about results — are up to 40% more likely to achieve sustainable engagement, according to the IDS Executive Compensation Review (2024).
However, these routines don’t need to be formal — they can happen in team meetings, performance dashboards, or even in one-on-one conversations about goal progress. What truly matters is consistency and narrative: employees need to understand that their effort has purpose, and that the performance bonus program is a compass, not an end-of-year prize.
How to Sustain Engagement Throughout the Cycle
On the other hand, the experience of companies with highly mature programs shows that sustaining engagement requires structure and intentionality. Below are some recommended practices based on international benchmarks and Actio’s field observations:
1. Establish Management Rituals
First, establish monthly performance meetings to review indicators and acknowledge progress. Managers who institutionalize these routines keep the program alive and the goals visible.
2. Create Progress Dashboards
At the same time, use modern platforms that allow real-time tracking of goal achievement and individual performance calculations. This enhances the perception of transparency and reinforces the sense of fairness.
3. Foster Continuous Communication
In addition, share partial results, show the evolution of key indicators, and tell success stories. Communication is the bridge between the rational side of goals and the emotional side of purpose.
4. Reinforce the Connection with Purpose
On the other hand, translate financial goals into real impact: profit that enables investment, growth that creates opportunities, and efficiency that preserves jobs. As James F. Reda highlights, the most powerful reward is the recognition of the value created.
5. Review and Renew the Program
Finally, review weights, goals, and parameters at each cycle — this is essential. It keeps the program aligned with market conditions and prevents the perception of an outdated or unfair model.
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Raia Drogasil Case: The Journey Toward Continuous Engagement
Raia Drogasil, an Actio client, faced a typical scenario where the performance bonus program was only remembered at the end of the year.
After integrating the variable compensation management module, the company began promoting quarterly performance routines and creating dashboards accessible at all levels.
The results were remarkable: active participation in goal-setting cycles increased by 52%, and the internally measured engagement index rose by 17 percentage points over two years (2023–2025).
According to the company’s HR leadership, “the performance bonus program is no longer an annual event — it has become part of the daily conversation about performance.”
The main features explored included:
Individual and Department Goal Cards
Each employee began tracking their goals, weightings, and results in real time.
Integrated Indicators and KPIs
The system centralized operational and financial indicators, enabling a consolidated view of performance.
Automated Score and Bonus Calculation
Assignment of weights per KPI and automatic calculation of scores and variable compensation amounts.
Transparency and Governance Dashboards
Leaders and teams began viewing results through dynamic dashboards with deviation alerts and comparative analyses.
Integration with Actio Performance Management
Variable compensation became directly linked to performance evaluation and individual competencies.
Engagement Is a Process, Not an Event
An effective variable compensation program is not the one that pays the most, but the one that keeps the connection between purpose, effort, and results alive. Sustaining engagement throughout the cycle requires communication discipline, performance routines, and tools that promote continuous visibility and recognition.
When the topic of “bonus” stops being remembered only on payday and becomes part of the team’s routine, the performance bonus program fulfills its true purpose: turning performance into a shared journey of success.
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