Annual Holiday Bonuses Dwindling in Popularity

63% of companies will not award holiday bonuses this year, according to the 2007 Holiday Study released by Hewitt Associates.  The study, which reflects the practices of more than 350 organizations, reveals that 53% of the organizations surveyed have never offered a holiday bonus and 10% have discontinued their programs.

Of those who have eliminated holiday bonuses, the following top reasons were given:

• Cost (50%)
• The development of pay for performance programs (37%)
• Difficulty in administering (16%)

Those who continue to provide holiday bonuses say they do it for the these top reasons:

• Say thank you and show appreciation (69%)
• Boost morale (16%)
• Maintain tradition (11%)

A few other notable findings from the survey:

• Of those 35% that will offer a 2007 holiday bonus, 42% will provide gift cards, 41% will award cash, 25% will provide a gift of food, and 20% will give some type of catalog gift.
• For those holiday bonusing organizations that give gift cards, the average amount is expected to go up to $52 this year, from $37 last year.

Watching this trend over the past decade or so, I have seen a lot of organizations eliminate the year-end or holiday bonus because they believe it flies in the face of their desired "pay for performance" philosophy.  My take?  I don't believe that driving and rewarding performance and showing appreciation are mutually exclusive goals.  You just can't accomplish them with the same vehicle.  You need to honest, clear and up-front about the intent and purpose of different reward practices.  That, I believe, is where some organizations found themselves in a troubling spot - trying to convince everyone that the year-end bonus was "pay for performance", a thank you and gesture of appreciation, and everything else rewards should be all wrapped up in a $200 check. 

Call me old-fashioned, but I hope this trend doesn't indicate that thanking and showing appreciation to employees is going out of style.  I can understand, in these days of heightened cultural sensitivity, why some would feel that the year-end holiday season isn't the most appropriate target time for this gesture.  Perhaps the trend simply reflects employers finding other better ways to let employees know that their efforts and contributions are valued. 

Here's hoping!

Comments

[Michael Haberman]

Ann, I am with you. I think "thank you" bonuses are good and should continue. We just gave our employees a bonus of $150. None of it was tied directly to individual performance. It was a way of saying 'thanks' for what you do. Is it utimately tied to performance? Sure! It they were not doing good jobs we would not have the company performance we have and thus not be able to afford the bonuses. But we did not make that connection and no one took it that way. They took it as a "thank you" and each in turn also said "thank you." Works pretty good at year end and makes everyone feel good.

[Ann Bares]

Michael:

Thanks for your comment and thoughts. Sounds like your employees appreciated the gesture of thanks. And, sure, ultimately, an employer that has had a poor performance year will probably not be handing out checks at year end. Employees get that, most of them at least. But I think it needs to be recognized as OK to reward people in a way not directly tied to performance. Most often there are other mechanisms and times for that to happen.

[Steve Roesler]

Thanks for the synopsis and commentary, Ann. I've got to agree with you regarding the idea that the two goals are not mutually exclusive.

As I watch the trend toward longer hours (even if the expectation is unspoken), smaller/no raises, and even the elimination of end-of-year parties (so no one is "offended" OR offered the chance to celebrate with colleagues), I wonder where all of this is headed. None is an indicator that organizations are stretching their thought processes to find new ways to acknowledge employees.

I'm also wondering if our corporations will, at the same time, continue to use the "People Are Our Most Important Asset" tag line in their Annual Reports.

Trying to eke out the last drop of profit at the expense of those who helped generate it can't work over the long run. Then again, maybe the long run is also a thing of the past.

Keep writing...

[Ann Bares]

Steve:

Thanks for stopping by and leaving your thoughtful comments and insights. Sounds like we've observed some of the same phenomenon in our consulting work - and not all of it hopeful or heartening.

[class factotum]

Oh, for the good ol' days when companies were a little bit paternalistic. My first job out of college, everyone left at 4:30. There was no voicemail or email, so no one was expected to work from home. We had all the federal holidays. At Christmas, everyone got a turkey.

My second main job, we worked slave hours, but they still gave us a certificate for $25 at Boston Market -- enough for a turkey at that time.

My most recent job (I was laid off two years ago), they cancelled the Christmas lunch because it was a waste of money, or so they thought. There was still money to build a separate cafeteria for the execs and for the CEO to get a $1.2MM bonus despite a plunge of 33% in the stock price, but no money for the holiday lunch.

[Wally Bock]

Thanks, Ann, for an informative and perceptive post.

I agree with your basic point about how showing appreciation and saying thank-you don't conflict with a pay-for-performance. Maybe you especially need a sort of group hug in those situations. We pay lots of attention to stars, but very little to the folks who do OK work, but without whom our companies would simply grind to a halt. The holiday season is a good time to make time to thank them, too.

We need two kinds of thanks in our organizations. We need one-on-one every day positive strokes for good work and good effort. And we need organizational events that say thank you to individuals and to everyone.

I think it's a sad commentary on our business culture that we even need to debate whether saying thanks is appropriate. Saying thank you is civil and darned helpful, too.

My mother wrote at least three thank you notes a day every day of her adult life. She taught me to do the same. One day, when I was young, I asked her, "Mom, what if there's no one to thank?"

She fixed me with that "mom-stare" and said, quite firmly, "Wally, there's always someone to thank." She was right.

[Ann Bares]

cf -

The work landscape has changed, hasn't it. But I have to say that I don't see being thankful and appreciative as "paternalistic" behavior on the organization's part. I see appreciation being part of an adult, mutually respectful relationship.

Thanks for sharing your thoughts and experience!

Wally-

Sounds like your mom was a genius. And I agree, it IS sad if we are debating the appropriateness of saying "thanks" to employees. When I do focus groups with workers as part of my consulting assignments, the thing I hear most often isn't "I want more money" (although I do hear that), but rather "I wish someone would notice and say 'thanks'".

Thanks for visiting and commenting!

[class factotum]

Ann,

I didn't mean "paternalistic" in a pejorative way. I meant it more in the "we appreciate and recognize what you do and don't view employees as fungible means to an end." Now, it seems some companies (at the the last two I worked for) are interested only in squeezing as much out of people as possible before eliminating their jobs. I understand the need to be competitive and to make money (I do love capitalism!), but slashing the workforce often seems to be the go-to solution.

[Ann Bares]

cf:

Thanks for adding the clarification. So many organizations do see "paternalistic" as a negative descriptor that I leapt to that conclusion.

It sounds like you and I are in agreement, though, that treating people fairly and respectully is not "anti-capitalistic" behavior!