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The Perfect Gift: A Christmas Bonus

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Author: Jason Kearns, VP of Technical Services

In recent years the Christmas Bonus was a species in decline. Once an American staple, it went out of favor for a couple of reasons.

First, you couldn't call it the Christmas Bonus anymore if you wanted to be politically correct. And unfortunately, Year End Bonus or Holiday Bonus just doesn't have the same cache with most of us.

Second, and more importantly, the argument began amongst compensation professionals that an obligatory bonus at the end of the year doesn't really affect behavior. The goal of compensation is to incent employees' performance. If they get a bonus every year just for showing up, where's the motivation?

The Recession, of course, saw all bonuses decline a great deal. And I suspect most employees were fine with that decision. Obviously, if the company goes under they don't have a job. However, in the years since the uptick in the economy we've seen many companies bring back the bonus, according to the numbers.

Why did some bring it back even during volatile times? 

Because it was the perfect gift. By my definition, the perfect gift follows two basic principles. It was needed by the recipient. It wasn't expected because nobody thought the giver could afford it or because the giver wasn't known for such generosity (or they just usually weren't paying attention to others' needs).

Giving a Christmas Bonus sends some powerful messages to your employees:

  1. We are a strong company.
  2. We care about our employees. Even at the expense of our bottom line.
  3. We don't want you looking around when the economy is doing well.

Sure, the Christmas Bonus may not affect performance directly but it does a lot of good for the psychology of the work force. Positive things are said about a company who takes care of their employees. Great performers recognize loyalty as well. I've personally heard co-workers talk about maneuvers like this for years.

Yeah but, they really took care of us during the dot-com bust.
I'm going to stick with them.

This is a great competitive advantage, especially now that talent has become scarce again. The companies who chose to keep the money locked up for a little while longer lost employees to those companies who were willing to pay for it. And the cost was much, much lower than it is during the current economic state (with the DOW Jones over 25,000). 

So go ahead, show the Christmas Spirit (or Holiday Spirit) and part with some gifts. Even a nice spiraled ham might do it for most employees. But please do something; you won't be disappointed. 

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