Holiday Bonuses: Are they worth the headache?

Holiday bonuses are a way for employers to recognize and reward employee accomplishments throughout the year and have become a tradition in many companies. Whether it’s a reward given to an employee for their individual contributions or a holiday gift that all employees receive, bonuses have been known to drive productivity and foster employee commitment.

Given the current state of the economy, bonuses may become a thing of the past. But, employers interested in keeping this holiday tradition alive can do so rather cost effectively. Just remember, there are some important considerations that should be made before you begin administering this year’s bonuses.

When divvying up employee bonuses, use the tips found below to ensure employee commitment is retained, company budgets aren’t squashed, and you aren’t setting yourself up for legal trouble:

1. Is it even in the budget? The feasibility of granting employees bonuses should be considered annually. The amount offered or whether a bonus will be provided at all, should depend on company earnings and whether the company has achieved certain targets throughout the year. Before making any promises or dipping into the company’s cash flow, be surea year-end bonus is something that the company is in the position to provide.
2. It’s supposed to be about appreciation. It’s the thought that counts. So if you can’t afford a holiday bonus this year, think of other creative ways to show your employees that they’re appreciated. Simple forms of recognition, such as praise, thank you notes, and even an extra paid day off is something we can all use a little more of. These simple gestures can serve to drive employee productivity, even during the end of the year “slump”.

3. How much should we give? The amount of the bonus should be based upon company financials. While there is no widespread formula used to calculate employee bonuses, 5-10% of an employee’s salary is typical for lower-level staff and 10-20% is more common for management level employees.
4. Tie bonuses to performance. When rewards are tied to job performance, employees are more likely to put forth the effort and produce quality results. On the contrary, when employees come to expect pay increases “just because”, their performance is likely to remain marginal.
5. Plan a bonus structure carefully. Large differences in pay-outs may cause hostility among employees – especially if some have been with the company longer than others. When dishing out bonuses think fair and equitable distribution, either based on seniority, job performance, or some combination of the two. However you go about determining bonus amounts, be sure the process is fair, free from bias, and is applied consistently.
6. Involve everyone. If at all possible, try to ensure everyone receives some form of bonus. While it may not be realistic to give your temp a 10% bonus, a gift card or other form of appreciation may be more practical. Whether it be monetary or not, everyone should be recognized in some way during the holiday season.
7. Manage employee expectations. A holiday bonus is something that may change from year to year, given budget constraints. As such, there may be some years in which administering holiday bonuses just isn’t practical. Because they aren’t always predictable, company bonuses should never be etched in stone or in any way promised to employees. If your company has regularly given holiday bonuses, but will be unable to this year, try to let employees know as early as possible; many factor in their holiday bonus as part of their yearly earnings.
8. Never make any promises. Bonuses that are discretionary are not usually viewed as implied contracts. But, those offered to encourage employees to achieve some desired goal are likely to be held enforceable once employees satisfy whatever criteria you have established to qualify for the bonus. Employers promising this for that will likely be required to uphold their end of the bargain. One way to avoid liability is to communicate publicly (and often) that bonuses are awarded entirely at the discretion of management and are not intended to be binding.

Given the country’s current economic state, bonuses may not be on the top of your company’s year-end to-do list. But, to be effective bonuses don’t have to dip into company budgets. Alternatives to monetary bonuses, such as gift cards, an extra day off, or even a simple holiday card go a long way in showing employees that they’re appreciated. Just remember, whether monetary or not, bonuses should always be distributed fairly and consistently.

8 Simple Steps for Maintaining Employee Efficiency during the Holiday Season

This time of year is busy for us all: with last minute shopping, preparing for and entertaining house guests, and traveling to visit friends and family, the holiday season can take a toll on us all. With so much to do and such little time to do it in, it’s difficult to concentrate on anything else. As a result, work often gets put on the back-burner.With all the hustle and bustle, employees typically feel overwhelmed and can become easily burned out. These symptoms can lead to a significant decrease in performance and mental energy, as well as an increase in frustration, absenteeism and even turnover. With holiday distractions and employee stress being a major culprit of employee inefficiency during the holiday season, employers need to be creative to ensure company goals continue to be met.

But, how can you look out for the best interest of the company without taking away from the holly jolly spirit of the workplace? Below are some tips to get the most out of your employees this holiday season:

1. Tie bonuses to performance. Year end bonuses are a tradition in many organizations – an extra some employees have come to expect. But this year, why not consider making employees work for their year-end bonuses? When rewards are tied to job performance, employees are more likely to put forth the effort and produce quality results. On the contrary, when employees come to expect bonuses “just because” their performance is likely to remain marginal.
2. Set an example. You can’t expect employees to give 110% if your managers are distracted by last minute shopping and are using work time to make plans for the holidays.Managers are role models and have a strong impact on employee performance and productivity. Show your dedication and employees will likely follow.
3. Live and learn. Did productivity suffer last holiday season? Pinpoint what went wrong and develop strategies to ensure you don’t go down the same road this year. Maybe last year’s culprit was due to added pressure to meet year-end goals or a lack of flexibility in allowing employees to meet outside obligations. Whatever the reasons were for last year’s inefficiency, don’t let history repeat itself.
4. Host holiday activities. Help employees to un-wind, de-stress, and have a little fun this holiday season by hosting company parties or events. Doing so demonstrates the company’s appreciation for its workers and increases employee commitment to the company. Participation in company events also enables employees to let loose and think about something other than work and holiday to-do’s. If holiday activities are on your company’s agenda this year, consider scheduling them during normal business hours to avoid conflicting with an employee’s outside obligations.
5. Reward, reward, reward. Recognition can go along way in boosting motivation and morale. Simple forms of recognition such as praise, thank you notes, and the like show employees you appreciate their dedication and hard work. These forms of appreciation can drive employee productivity even during the typical holiday lag.
6. Give the gift of time. Allow employees to take a few hours one day to catch up on last minute shopping or other personal obligations. Employees will feel less stressed and when they return their spirits will be renewed. This simple perk can go a long way in fostering increased commitment and in demonstrating your support for your employees’ personal lives.
7. Set realistic expectations. Holding employees to unrealistically high standards this time of year is likely to only increase stress levels. Try to make an effort to schedule major projects once the holiday season has wound down. The last thing you want is a burnt-out staff, come the New Year!
8. Be flexible. Consider alternative work schedules to accommodate employees during this busy time of the year. For example, offer flextime opportunities such as a condensed workweek (i.e. four 10 hour days) or allow employees to choose their hours, as opposed to working the typical nine to five. This enables employees to complete their job responsibilities on their own terms and often results in increased performance. Employees taking advantage of flexible work schedules also tend to experience less stress because they are able to more easily meet their personal obligations.

This time of year is full of distractions. But before chalking it up to be the “status quo”, there are some minor adjustments that can be made to work schedules and management styles that will allow employees to remain productive amid the holiday rush. Let this holiday season by a happy and productive one!