Small Business Owner's Guide
to the Holiday Bonus

by Patricia Schaefer

Is your company giving out holiday bonuses this year? Did they give them last year? Find out what other businesses are doing and get tips on how to give (or not give) holiday bonuses without causing bad feelings among your employees.

The 1989 movie National Lampoon's Christmas Vacation shows us in a very funny yet poignant way just how holiday bonuses and the expectation thereof can be viewed by employees.

It seems character Clark Griswold puts a $7500 deposit on a family swimming pool based on an anticipated Christmas bonus. For 17 years, Griswold has received a holiday bonus. When Griswold receives a membership to the Jelly-of-the-Month Club instead, he snaps, and Cousin Eddie kidnaps boss Frank Shirley for retribution. When the boss is brought to Griswold's home and sees how the suspension of the company bonus has affected the "little man," Shirley tells Griswold, "Whatever you got last year, add 20%." The boss's wife learns of the goings on, and she contemptibly exclaims to her husband, "Of all the cheap lousy ways to save a buck!"

The Holiday bonus today

Fast forward to 2013 and you'd be hard pressed to find an employee working with the same company for 17 years let alone a company that has given their employees bonuses for the same number of years. Employees of today know only too well not to count on getting that holiday bonus. 

According to a recent American Express survey, only 27% of small businesses plan to give their employees holiday bonuses in 2013.  

A trend in recent years is the replacement of holiday bonuses with performance-based bonuses. In these pay-for-performance programs, employers tie bonuses to performance as opposed to the holidays; thus helping to meet company's goals and objectives. In other words, "Have a Productive Christmas" and an "Improved Bottom-line in the New Year."

Related: Small Business Owner's Guide to Holiday Tipping

A sampling of company bonus plans

Survey 25 different small businesses and you'll most likely find 25 different company policies on holiday bonus giving. Ethan A. Winning, president of HR and management consulting firm Ethan A. Winning Associates, Inc., shared with Business Know-How a sampling of his Christmas Bonus Survey results from 2005 and 2006. Winning asks employers on www.ewin.com: "Are you giving bonuses this year and, if so, how much or on what basis?

2006 Survey

Reponses thus far number 10: Three will give a holiday bonus/four give performance-based bonus/Three will give no bonus. Here's a sampling:

"No bonus this year. No bonus since 2002. The company is doing very well, but we decided to pay for performance and we came to realize that across the board bonuses rewarded the marginal employees as well as the good ones."

"Our company does give a Christmas bonus based on longevity. In addition, we give our employees merit increases and special year-end bonuses for high performers based on specific goals."

"The company decided today to give a Christmas bonus to all nonexempt employees. $100 across the board. It's better than nothing."

"No Christmas bonuses. Never have given in 18 years of being in business. We're manufacturing."

2005 Survey

Responses numbered 32: 20 gave a holiday bonus/ Five gave performance-based bonus/ Seven gave no bonus. Here's a sampling:

"A flat $200 to office staff; $500 to the office and administrative managers; and nothing to sales staff. We only have 18 employees. This is by the way about half of what we gave last year."

"We did away with them about four years ago."

"Everyone in the office received $200 and a watch regardless if you are management or not. It also doesn't depend on the amount of time you have been on the job."

"We give incentive bonuses based on yearly performance prior to the holidays. All employees are eligible from 5 to 20% of annual salary depending on position."

"We have 14 employees. Christmas bonuses -- in cash -- are approximately 10% of the annual salary."

"Holiday bonuses have been eliminated and replaced with performance based bonuses."

"We have 70 employees and do give bonuses to all key employees, both exempt and non-exempt. The amount varies from $500 to $8,000. We also give each employee a Christmas box filled with ham, maple syrup, cheese, candy, nuts, fruits, etc."

"Our company gives away a supermarket card in denominations of $150, $100 and $50 depending on how many years you have worked with the company."

"We no longer give bonuses. We still have a Christmas party and we may hand out some very small gifts, but we haven't given cash or salary bonuses in three years."

Related: 5 Tips to Attract, Keep and Motivate Your Employees

Tips for Giving Holiday Bonuses

First, can you afford to give a bonus? During a 25-year span, one employer changed their yearly bonus offerings depending on each year's earnings and profits. During lucrative years, employees enjoyed lavish holiday parties with high-priced raffle prizes and generous cash bonuses. In lean times, there were no cash bonuses, no party and no prizes.

If your company has without fail given holiday bonuses for a good number of years, but will be unable to the next, try to let employees know as early in the year as possible. Many employees count on that bonus check and factor it into their household budget as part of their yearly earnings.

Choose bonus amounts carefully and fairly. When determining bonus amounts, think "fair and equitable distribution." In other words, bonuses should be consistent, given out uniformly and on an unbiased basis. Care should be taken that no worker feels unfairly shortchanged.

Include all workers. If at all possible, be sure that everyone working at your place of employment is recognized in some way during the holiday season. One four-month-long temp worker was crestfallen when the week-long employee in the cubicle next store received a bonus and she didn't.

Give the gift of time. If your company can't afford to give cash or gift bonuses this year, consider giving the gift of time -- paid time off, that is. Time off with family and friends is something that virtually everyone could use more of. Employees will appreciate an extra day off or two to relax during the year-end holidays after all their hard work during the work year.

Related: Keep Employees Focused During the Holiday Season

Copyright 2006, Attard Communications, Inc.

About the author:
Patricia Schaefer is a staff writer for Business Know-How. She can be reached by email at pschaefer@businessknowhow.com 

 

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