Christmas Bonuses – Are they a good idea?

26 Nov
by Bridget DiCello

Christmas Bonuses are frequently discussed and often given – at both large and small companies – to their employees this time of year. Are they a good idea? It is the season of giving and no employee in their right mind would turn them down.

A few thoughts on bonuses:

  1. Make sure it is very clear what the bonus is for. If it is based on performance, then make sure it is determined by individual measurable (and actually measured) performance indicators. If it is based on company performance, make sure to communicate what, in particular, each employee did to contribute to the success of the company over the last year.  This is as simple as putting specifics in a note with the check/bonus enclosed, and/or having a discussion with them about where the bonus comes from. This way, the employee will know specifically what to continue to do to impact their bonus (and your bottom line) next year. Ideally, these are the same metrics you have been using to hold the employees’ accountable throughout the year, during regular one-on-one conversations and during their performance evaluation.
  2. If you don’t tell the employee what the bonus for, it is a gift, and they will automatically and probably rightly expect it to happen and probably increase every year. Budget for these gifts, so regardless of company performance, you can continue with the generosity you desire.
  3. If you give pure gifts (not based on individual or company performance) to employees, don’t change them radically in value from year to year. If given a smaller gift one year than the last, they will automatically wonder what they did differently to deserve a different gift, wonder if the company is not doing well or if you are upset with them or their performance. Having gifts fluctuate with overall company profits is difficult for your front line employee to fully grasp.

Remember, employees are reading the signals you are sending and money does send its messages. Your best bet? If you’re going to give a gift, give one and call it that. If you’re going to give a bonus, tie it to something valuable to your company’s desired results.

Welcome to the Christmas season!

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