Benefits and Compensation

Are We Saying Bye-Bye to the Holiday Cash Bonus?

Bonus programs are changing. Some offer alternatives to cash, and others tie the cash to preset individual or team goals.

If your employees are popping their heads in and out of their doorways this week, glancing down the corridor with an expectant look on their faces, it’s understandable.

They’re waiting to catch sight of their bosses carrying those “little white envelopes” with an extra dollop of cash for work well done this year. It’s bonus time in America.

The little white envelope at holiday time, however, may be starting to follow the hand-cranked calculator and plug-in switchboard into workplace oblivion. A survey by the benefits tracking organization, WorldatWork, has shown, for the first time, no growth in companies awarding cash bonuses after 4 straight years of increases– the same percentage, 76 percent awarded them in 2005 as in 2004. And more and more companies are seeking alternative ways to show their appreciation.

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“Really try to understand what your employees find valuable,” advises HR consultant Susan Richards of Buck Consultants in Atlanta, as reported in HR Magazine. “ It might vary from additional educational opportunities to work/life balance to a more flexible work schedule to recognition from peers. I don’t think there’s a one-size-fits-all reward program that’s going to work.”

Some of this may be attributable to generational factors. Surveys have shown that while money is a key motivator for mature workers, younger employees have different values. Even geographical factors may play a role. One rural firm, for example, arranged its schedule so that work on major projects was complete before moose hunting season began. Then it gave its workers extra time off to pursue their four-legged interests.

Tie Bonuses to Preset Goals

Where the cash bonus does continue, its nature seems to be changing.

Instead of an expected perk year-in and year-out, more companies are tying the bonus to specific individual or team performance targets set long before the bonus is paid. These programs award points toward the bonus as time passes and provide employees with a running measurement of their progress toward the preset goal. “Bonuses not tied to a point system are a waste of money,” says HR author Aubrey Daniels, as quoted in Workforce Management. “If you don’t get a bonus, you feel management is stingy, and if you get it, it’s what you expect.” With a point system, Daniels notes, “If you don’t earn it, the reason is simple. You didn’t do what is listed here.”

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One suggestion from HR experts if you do pay a cash bonus: Don’t just direct deposit in the employee’s bank, as you would regular pay. To maximize recognition and emphasize gratitude, create a specially made out, even decorative, check, and have it personally handed over by the boss … in a little white envelope, of course.

1 thought on “Are We Saying Bye-Bye to the Holiday Cash Bonus?”

  1. I think that is very interesting and I agree completely. Is there any way for you to let me know which company does the projects before moose hunting season. I think that many midwestern states and companies could learn a lot from that. Thanks

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