Few can forget the epic expletive-rich scene in which Clark Griswold is given a jelly of the month membership in lieu of his expected bonus in the holiday classic National Lampoon's Christmas Vacation. A longstanding tradition among small and large businesses alike, holiday bonuses provide a well-earned gift for valuable employees in appreciation for their hard work and commitment. Employees plan on these bonuses to offset increased holiday expenditures and often include them in their compensation expectations.
Holiday bonuses differ from year-end bonuses in that the former is usually not guaranteed (though many might argue otherwise), and typically a sign of gratitude that is given prior to the holidays - as early as November; the latter is generally written into contracts, strictly performance-based, meant to incentivize continued efforts, and often given in mid to late January, after the company's annual performance and profits have been determined. Deciding which form of bonus makes the most sense for your business, and for how much, is an important consideration, particularly as the job market continues to struggle with a glut of competitive employment options.
If you decide on year-end bonuses, then most of the guesswork is handled for you, particularly if the specifics are written into employee contracts. If amounts aren't specified, figure your company's financials after the close of the year, determining an excess for profit-sharing or bonuses. Then, equitably divide this amongst employees based on position, performance, and tenure.
Experts agree that if you decide to give holiday bonuses, everyone should receive one to avert demoralizing your workforce and avoid any claims of favoritism or discrimination. Still, each bonus should be reflective of the employee's commitment, accountability, and expectations within the company - the newly hired hourly greeter might not require the same level bonus as the salaried 15-year veteran manager. "Employees who make more money, spend more time, have been with the company longest, or who perform integral or managerial tasks can probably receive a more generous bonus than employees who don't fall into these categories," says William Lipovsky, Founder, CEO, and Editor in Chief of First Quarter Finance.
Once you've determined the level of bonus for each of your staff, you can assign the amount. Most often, holiday bonuses are a specific percentage of the employee's annual salary, generally ranging from five to 10 percent. So, a salary of $50,000 a year would warrant a bonus of $2,500 to $5,000. Since positions carrying greater expectations and responsibility are typically better compensated, this automatically fairly stratifies bonus sums and makes administration a snap.
That said, bonuses need not be monetary. Paid time off, gift cards, luxury goods, memberships, or any combination thereof can all be great bonus options as well. So long as you avoid jelly of the month.
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