Guide to Giving Holiday Bonuses

Whether to give a cash bonus, how much to give, and whether there are alternatives are questions many entrepreneurs ask during the holidays.

The bonuses that employers give at the end of the year sends a message to employees. And, during the holidays, employees are listening. So before you give employees their bonuses, or don’t, think it over very carefully.

Types of Holiday Cash Bonus

If you decide to give cash bonuses, there are several common ways to choose what amount to give:

• End-of-year performance bonus based on the employee’s goals and objectives
• Percentage of the employee’s salary given every year regardless of performance or revenue
• Flat dollar amount given out to all employees based on status (usually full or part time, or salary range)

Which the company chooses to give depends on what the company can afford and what they are hoping to achieve by giving the bonus.

Performance based bonus

Some companies really like to bake the holiday bonus in with the end-of-year performance bonus. This can help ensure that employees are working their hardest throughout the year and deserve what they get come December.

Percentage based bonus

However, not all employees need their bonus to be performance based in order to perform. Percentage bonuses act as a part of an employee’s salary. It is precisely that high salary that keeps the employee working hard.

Flat dollar amount bonus

Flat dollar amounts will usually be based on company profit. When revenue is high, bonuses will be too.

Who Gives Bonuses and How Much?

Holiday bonuses are customary in many types of companies but not all and not for all employees within the company. According to the 2014 Bank of America survey, 52% of businesses plan to give a holiday bonus.

Retail employees may not generally reap the benefits of the holiday bonus but professional employees usually do. Wall Street employees receive bonuses in the 6 figures each year. Professional salaried employees working for large corporations can expect bonuses in the 5 figures.

Non-Cash Holiday Bonus Ideas

Gifts have a place during the holidays but who you give them to and what type are important considerations. For low-wage and part-time workers, receiving a thoughtful gift, being invited to the company Christmas party with food and drink provided, or even receiving a special card can go a long way towards positive morale.

An employee who loves wine, for example, might really appreciate a good quality bottle, especially if it is accompanied by a kind note. For an employee who takes the bus, a paid bus pass might be nice. Extra time-off is generally valued by most employees. And the great thing about this bonus is that it is mostly free for the company to give.

If giving a gift as a holiday bonus, make it a clever and thoughtful one. Consider writing a note to a valued employee to go along with the monetary bonus. Employees will always remember these gifts so make sure they’re good.

What Not To Do

Be careful what and how much you give. Little gifts might be fine for part time employees but professionals expect more and many of them even rely on the bonus as part of their income.

• Cheap gifts – When a very lucrative company gives its employees fruit cakes for its holiday bonus, it sends the message that they don’t value their employees enough to give them something that they would actually like.
• Company merchandise – Employees aren’t going to see a t-shirt or pen with the company logo printed on it as a gift, rather it will just look like a heartless marketing gimmick.
• No increase – Receiving the same amount each year, regardless of the growth of the company, the hard work of the employee, and the status of the employee might seem insensitive.
• Reduced amount – When business is slow, giving an amount less than previous years is probably ok, although employees should be warned in advance since they do come to expect this perk. However, when business is good or stable, giving less than the employee received in previous years could be hurtful.
• Nothing – Giving employees nothing at all in a good year is sure to make an employee feel that either they are not valued or they are working for a thoughtless or greedy company.

If you feel you need to do one of these, be open with the employee and explain the reason.

Where to Keep Track of Bonuses

If you use our Timesheets.com to track employee time and expenses, you can track bonuses too. In the software, you can keep track of what you give employees each year so that you can give appropriately in subsequent years.

Start tracking employee bonuses with Timesheets.com!