As the office continues to evolve to reflect the ever-changing modern workforce, holiday bonuses can be a hot button issue. Startups often forgo cash bonuses altogether while they are finding financial equilibrium, while more traditional companies have steered them in their approach to the point they’re considered part of an employee’s annual compensation. Without getting too deep in the tendencies of the changing workplace, the facts are clear: incentives keep employees happy and improve employee retention. And, they do not need to bankrupt you.
It’s hard to enter averages and norms when it comes to the Christmas bonus. Every organization is unique, and in regard to small businesses, you can find wildly different strategies to worker participation, reimbursement, and perks. But there are a couple of types of bonuses which can allow you to choose the ideal option for your business.
One important issue to keep in mind throughout this whole process is that communication is key. Whatever system you choose, be ready to reply to your workers. You’ll need to field questions such as why you went with that sum, why so got more, etc, so prepare yourself with honest, clear answers. Implementing a reasonable system ensures that all workers feel appreciated — the purpose of their Christmas bonus in the first place.
Having this type of Christmas bonus, the exact same amount goes to everyone. This is a great choice to guarantee comradery among your workers, and also to make a clear distinction between this vacation token of appreciation and anything to do with performance or salary. When selecting an amount, remember that you’re setting a benchmark for the next several years. Anything you give this season will need to be increased next year — or even, your employees will want a good reason it did not.
The wages percentage
An alternative that typically keeps things civil involving staff is that a bonus based on salary — in this choice, everyone receives 1.5 percent, for instance, of their yearly salary. This frequently works out to two or even four weeks’ pay, which explains why it’s sometimes known as the 13th-month pay. Like a level Christmas bonus, this kind makes sure that everyone has a clear idea of why they received their amount, and why the employee sitting together might have received more (though it might evoke a larger conversation about salary discrepancies).
A Christmas bonus based on your own performance review is catchy, but the wider message is good: all employees must be helping the company meet its goals and objectives. However, with performance reviews increasingly panned as an ineffective productivity instrument, aligning your vacation bonus together might be problematic.
The profit share
This is a combination of the above: some portion of the organization’s profits are set aside and then distributed evenly throughout the team. In ways, it combines the best of both worlds: it keeps things just and equivalent, but it also encourages workers to feel like a stakeholder in the organization’s success. An important consideration in this kind of bonus is, again, communication: it may not always be clear to employees how the company is doing in the top level. If profits — and, subsequently, bonuses — are going to fall from 1 year to another, make sure you tell your employees as early as you can. If this happens, be prepared for a hit to morale — tie the message in with some team-building activities, or a productivity-boosting occasion to keep employees engaged and targeted up to boost profits in the coming year.
The recognition incentive (a.k.a. the choice to cash)
If the budget for bonuses is reduced, an employee gift is a good alternative. A gift certificate, movie tickets, a magazine subscription, or even a bottle of wine can be a nice gesture — also, it will likely be more appreciated than the cash equivalent (the average price of such gifts is less than $100, based on this poll ). If it’s possible, add a handwritten note — the time-investment will cover off. In terms of different alternatives to cash for your Christmas bonus, consider giving employees additional paid time off, or implementing flexible hours over the holidays.
No matter what kind of bonus you choose to use, the goal is the same: worker appreciation.