Holiday Gifts Vs. Bonuses Debate

I am privileged to have Frank Giancola as a reader and commenter on this blog.  (Frank is a prolific researcher and writer on compensation topics; a few of his articles have been featured here, including Applying Advertising Principles to Compensation & Benefits Communication and Employee Sabbaticals.)

Frank shared a comment on my recent post Holiday Bonuses Continue to Wane, Replaced by Pay-For-Performance, which includes the following:

Hewitt's connection of Christmas gifts, such as a turkey, with performance related pay is bit strained and not suggested by the survey, per se.

The Christmas gift is gesture of good will and can be a token amount.

I think Frank makes a point worth considering and discussing, and I would welcome the thoughts of others as well.  Is a holiday bonus a gift?  A thank you?  A gesture of sharing the results of a good year?  A reward for good performance?  All of the above?

Here are a few of my thoughts on the matter - and I look forward to hearing the wisdom of others.

It is my belief that part of the issue we (as employers) are experiencing with the concept of a holiday bonus - all political correctness issues of the "holidays" aside - is the fuzziness about what the intent and purpose of the bonus is.  This matters when it comes to judging the "success" of the event.  If the intent is to simply provide a token holiday gift to employees, then it only needs to be well received and appreciated to have been successful, in my eyes.  If the intent is to motivate and reinforce performance, then the standards and criteria for success will be different.

In my experience, many employers try to accomplish too many things with the year-end award.  As with any reward, effectiveness is largely about clarity and focus; I have rarely (if ever) seen a multi-faceted, murkily communicated award that accomplishes much. If an employer wants or needs to accomplish multiple things at year-end, perhaps multiple vehicles are needed.  For example, the turkey (or other gift of food) can convey holiday cheer and good wishes, while the annual incentive plan can provide a way to share the rewards of a profitable year. 

Others??? 

Comments

[Paul Hebert]

I think you're right on the money with your comment... "many employers try to accomplish too many things with the year-end award."

Across the board, companies lump together multiple objectives and goals into a common program with a bad mash-up of objectives and criteria. Employees at best are confused and at worst looking for work elsewhere.

A holiday "gift" is a thank you for being part of the "family." This is an emotionally charged experience rather than a "bonus" which is a transactional or business focused event. Employers need to look at their overall goals as an organization and develop a strategy that addresses their employee's emotional AND transactional needs/wants. Compensation and goal-based incentives are transactional. Holiday gifts and recognition are emotional. Both are important but when they are packaged as a single event they are not simply ineffective they are actually damaging. A company would be better off doing nothing.

[Peggy Andrews]

I agree that some employers try to do too much with holiday bonuses. I think that 1) They should be completely seperate from performance reward plans. Whether you are talking about individual reward plans, or group bonuses based on an available pool that was generated due to great business performance, call these performance reward plans, don't call them holiday bonus plans just because they fall at the holiday time. 2) Holiday gift plans should represent a "thanks for your hard work all year and we care about you too" message, 3) They should be equal across the board (not more expensive for execs, etc.) - as one comment said, it's about being "in the family", and 4) If you decide to have a holiday gift program, do it whether profits are up or down. If you don't have a lot of cash on hand, you can still do something meaningful for the employees to represent the above-referenced messages. Just get creative!
Great blog, Ann! Informative and engaging!
PA