With the end of the year comes a lot of pressure. In our personal lives, we take the time to reflect on what we’ve done the year before. Facebook is nice enough (yeah, right) to even provide a video summing up the year you’ve had. It’s also a time that many of us reflect on where we are at in our careers. If you’re the employer, this makes it even more challenging, as you want everyone who has done a good job to be rewarded for his or her efforts. It doesn’t take a genius to know that an employee that feels valued will stick around longer and work harder. Great incentives also boost motivation. Your company might not have made the same amount of money as in years past, however, so giving out what you gave last year might not even be an option. And do you give out a holiday bonus as well as a performance-based bonus? Or just a gift? Do you give the same thing to everyone? So many questions, so little time. There are many things to consider about whether to give out end-of-the-year bonuses, so let’s examine this a bit more.
The first consideration is whether your business is a small or large one. Large corporations are more likely to get away with performance-based bonuses or even bonuses that are a percentage of a person’s salary. Small business employees are more likely to get bent out of shape by this kind of thing, as they can see what their fellow employees do day in and day out. A lot of small business owners choose to go with flat-rate bonuses for everyone. This can vary but as this FirstQuarterFinance.com article notes, it often falls between $300-$500. That same article goes on to note that “Sometimes companies give holiday bonuses equal to one or two weeks’ salary. As a Christmas bonus percentage, this would be about roughly .5%-1% of an employee’s annual income.”
Hopefully you’ve done a good job in hiring excellent employees and making these employees feel valued all year long. And if you’ve provided spectacular perks and benefits, this shouldn’t be a sticking point for anyone. Should the amount of your bonus be significantly smaller than years past, a loyal employee will understand that this is a fact of life and businesses have bills to pay, too. However, you should open the lines of communication with them about this so they’re not left feeling deflated. Founder of We Buy Houses Denver Nick Evans knows this firsthand. He couldn’t give the significant bonuses he now provides when he first launched the business, but his employees were so happy with the work environment and where the company was headed that they didn’t mind.
As mentioned, if you’re the CEO of a large corporation, performance-based bonuses are more likely to be copasetic with your employees. But beware—even large corporations fall victim to water cool chat. Be sure to be fair when doling out these bonuses. That means giving the same bonuses to men and women doing the same job, factoring in effort and hours spent at the office as well as the time an employee has spent at the company, or even considering giving out a percentage of the employee’s salary. If you stay consistent, your employees should be very pleased with their bonuses.
The other guideline to follow is to provide a separate end-of-the-year bonus and holiday bonus. In fact, you might consider giving the former in November and the latter in December. Employees will understand that one is typically performance-based and one is simply a show of appreciation. Holiday bonuses can also be cash but they often come in other forms, too. From wine-of-the-month clubs and gift baskets to food and gift cards, a holiday bonus can come in all varieties. Another form these holiday bonuses can take is in extra vacation days. In fact, extra days off are often more appreciated than actual physical gifts.
Whether to give holiday bonuses is completely discretionary, as there are no laws or guidelines mandating these. Use your best judgment, treat your employees well, and follow these tips and your employees will likely be more than pleased.