‘Tis the holiday season and for many business owners, that means figuring out how to treat hard-working employees to extra vacation time, a holiday party and the most important of all holiday indulgences – the holiday bonus.
When it comes to holiday bonuses, small business owners operate in the sometimes confusing space of personal discretion. No two businesses have the same approach and owners can set their own precedent for holiday extras, which can turn into a daunting task given the precedent it can create from one year to another.
With so much personal discretion from one business to the other, how can business owners determine what is considered a “fair” bonus in the marketplace?
A new survey conducted by Accounting Principals, an HR firm, can provide some much needed industry insight. The Accounting Principals Holiday Bonus and Hiring Survey polled more than 500 U.S. HR and hiring managers, and explored company holiday celebration and hiring trends. The survey revealed:
- Two-thirds of HR and hiring managers (67 percent) reported their company plans to give monetary holiday bonuses this year.
- The average holiday bonus this year, as indicated by respondents, is expected to be $858.
- Of those not planning to give monetary bonuses this year (33 percent), 27 percent indicated they plan to give their employees other perks, or offer bonuses at other times of the year (23 percent).
- The majority (92 percent) of respondents indicated that their company plans to offer perks this holiday season, with a holiday party emerging as the most popular choice (64 percent).
How to structure a holiday bonus
Start with some key questions:
- What role will a holiday bonus play in your yearlong pay scheme?
- Is it a substitute for a year-end bonus?
- Is it a substantial contribution to annual pay?
- Is it a token of holiday spirit?
If you’re thinking of your holiday bonus as a part of established annual pay, this is something that should be part of your annual budget. However, if you’re thinking of the bonus as a token of appreciation during the holiday season, it makes sense to look at revenue from the first 10 months of the year to decide how to approach bonuses each holiday season. However, take caution about being too generous. If you go from a great year to one that’s not so stellar, it could result in a significant downgrade for your employees come holiday bonus time.
Tips for giving holiday bonuses
- If you can’t afford to give cash or gift bonuses this year, consider giving paid time off. Time off with family and friends is something that virtually everyone could use more of.
- If you find yourself in a situation where you’ve typically given holiday bonuses but will be unable to do so this year, try to let employees know as early in the year as possible. Many employees count on that bonus check and factor it into their household budget as part of their yearly earnings. Consider offering time off instead or a smaller, yet still meaningful, gift.
- When determining bonus amounts, be fair. Bonuses should be consistent, given out uniformly and on an unbiased basis. It’s important to make sure no one feels unfairly shortchanged.
- If at all possible, be sure that everyone working for you is recognized in some way during the holiday season – whether they’re a longtime employee, a temp worker or an intern.
As you decide how to handle the holidays, keep in mind that whether it’s cash or an alternate special gift, to employees, it’s your appreciation for their service that counts the most.