Do you provide your employees with a year-end bonus? Do you want the bonus to mean something to your key employees? This document by Jack Fries, second in a series of two, offers helpful advice. (Part One HERE)
A recent study by benefits consultant Hewitt Associates shows that 67% of companies offered no holiday bonus or gift last year. But don’t blame the recession, Mr. Scrooge, or the Grinch. Most companies never gave holiday bonuses to begin with, Hewitt says.
Others quit giving holiday trinkets long before the economy turned. Instead, they’re putting their resources into incentive and performance-based programs.
'The value of the awards wasn’t enough to create excitement,' said Ken Abosch, a talent management business leader for Hewitt. 'Getting token bonuses at the end of the year just doesn’t do it for today’s work force — and it also doesn’t do it for investors and shareholders.'
An informal poll of the nation’s employers showed that none give large cash holiday bonuses. Most employers give nothing at all this time of year. But not everyone goes home empty-handed.
Of the companies that provide a bonus:
- 39% provide cash (median $200 per employee).
- 36% give gift certificates (about $25 a worker).
- 28% reward employees with food (such as a turkey or ham, costing about $20 per employee).
More than half of the companies that offer no holiday bonus have never had one. Of the 16% that have discontinued programs:
- 59% stopped because of cost.
- 34% cut bonuses because of entitlement issues.
- 24% developed performance-based programs instead.
I believe that all salary and bonuses should be based on performance. Depending on the structure of your agency, it could be employee, departmental, or agency based.
Before you make any major changes to your year-end bonuses, consider your employees. Once you establish the practice of giving cash or other bonuses, it becomes expected. If you’re going to eliminate or change the bonus plan, it’s imperative to tell your employees as soon as possible, at least six months in advance.
All businesses should have a performance-based bonus plan. This allows those who want to excel the opportunity to do so and to be rewarded for their efforts. Without the ability to identify and reward excellence in your business, you breed mediocrity. Give your eagles the opportunity and encouragement to soar. Don’t make them dwell on the ground with the turkeys.