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.

Holiday Bonus Guide
Image source:

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!"


Related: Small Business Owner's Guide to Holiday Tipping

The Holiday bonus today

Fast forward to now 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. Small businesses, in particular are vulnerable to changes in the economy and consumer buying pattern . And, according to the findings of a Bank of America survey, small businesses are starting to tighten their belts when it comes to holiday perks, with only 32% saying they'll give a cash bonus this year compared to 52% in 2015.The survey shows 28% of small businesses will offer no perks to employees during the holidays..   

What kind of bonuses are employers giving?

Survey 25 different small businesses and you'll most likely find 25 different company policies on holiday bonus giving. When we surveyed Business Know-How readers this Fall, we found 75% of businesses with fewer than 100 employees plan to give employees a cash bonus this year. Some small businesses plan to give a flat dollar amount to each employee. That flat amount varies by the industry and profitability of the businesses, but in our survey, the amounts ranged from $50 to $5,000, with the median being $300. A survey by Accounting Principles that included both big and small businesses, shows that 37% of employers plan to give their employees a bonus of between $100 and $499, while 50% expected to give employee $500 or more.

In other cases, the amount is a percentage of each employee's base salary. The actual percentages, again, vary significantly from business to business. In the Business Know-How survey we found the percentages varied from 1% of annual salary (slightly more than a half-week's salary) to 10% or more. The most common frequently cited figures were one to two weeks salary for full time employees. 


Performance-based bonuses

Some companies give performance-based bonuses instead of holiday 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."

Non-Cash Gifts

The Business Know-How survey results show that 43% of small businesses will give their employees non-cash gifts or other perks during the holidays this year. The perks mentioned include extra time off, flexible hours, a purchased gift and holiday parties.

Related: 5 Simple Things That Will Make Your Employees Happier

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.

Related: Keep Employees Focused During the Holiday Season

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.

Copyright 2016, Attard Communications, Inc.

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


Free small business newsletter
Get great business ideas and advice like this sent to you in email twice a week.
Subscribe to the free Business Know-How newsletter. 
Enter your primary email address below


Follow Us and Share