Are Holiday Bonuses Right for Your Company?

The holiday bonus is something that has made good fodder for holiday comedies for years, but many companies have lately altered their views on this practice.

holiday bonus

The holiday bonus is something that has made good fodder for holiday comedies for years, but many companies have lately altered their views on the age-old practice. Holiday bonuses can be tough on companies when profit margins are down and can send the wrong impression if employees are expecting more than they receive. With this in mind, are holiday bonuses right for your company?

Holiday Bonus Complications

Holiday bonuses can go awry when companies miss the mark and deliver less than what’s expected or when employees receive differing amounts. If an employee is too disappointed in their holiday bonus, he or she may feel undervalued and decide to leave. Employees may also become resentful of one another when one receives a larger bonus.

Merit Based Bonuses

Some companies have decided to offer merit based bonuses instead of flat bonuses at holiday time. When employees know that their bonuses will be based on merit and not just given freely, it can be an incentive to work harder. Using this paradigm for bonuses can also protect your company if profits are down, as employees will expect a more modest bonus or no bonus based on the numbers.

Communication Regarding Bonuses

Due to the prevalence of holiday bonuses in past years, employees may expect a bonus. Even if your company is new and no discussion has been had about bonuses, you may disappoint employees by failing to provide an adequate holiday bonus. For this reason, it’s important to discuss holiday bonuses whether there will be one or not.

If your company will be giving holiday bonuses, let employees know how they will be calculated so that you can match their expectations when the time comes. If your company won’t be giving holiday bonuses, discuss the reason behind the decision so that employees are prepared and resentment is mitigated.

It may be prudent to discuss holiday bonuses in an open way to gauge employees’ hopes and feelings on the subject. Employees may feel more appreciated if bonuses are based on individual accomplishments or are calculated according to company achievement. Employees may also surprise you by relaying a desire for more time off or other types of perks in lieu of extra holiday pay.

Non-Monetary Bonuses

Additional paid days off, gift cards, and even products produced by the company or sister companies may all make for good holiday bonuses. When giving these types of bonuses, however, it’s important to ensure that the perks will be well received and not perceived as a way to “cop out” of giving monetary bonuses. If employees understand that perks and gifts are meant as a token of appreciation and those bonuses are actually helpful in some way, they will be more likely to appreciate them.

Poorly Planned Holiday Bonuses

Giving all employees the same holiday gift, such as a fruit cake or bottle of alcohol, is generally a bad idea. Employees may not all enjoy the gift and in some cases it may even challenge their ethics. Again, communication is key to determining the best way to thank employees for their hard work throughout the year.

After Holiday Bonuses

Some companies have switched to providing bonuses after the holidays based on year-end results. As long as employees are in the know about when to expect these bonuses, it may be better for the company and the employees to receive bonuses after the holiday season. The holidays are often a busy time for companies and an expensive time for employees, so it may be helpful on both ends to wait until the beginning of the year to dole out bonuses.

Every company is different, so you may wish to offer non-monetary bonuses, change the structure of your holiday bonuses, or forego the practice altogether. Whatever you decide upon, be sure to bring your employees into the fold and let them know that they are appreciated, while still being practical about what’s best for your business.


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