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The end of the holiday bonus?
 

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Though they were once as American as overeating and credit cards, holiday bonuses are fast becoming an endangered species, according to a survey by HR consulting firm Hewitt Associates. Only 35 percent of companies have a holiday bonus program this year, down from 41 percent two years ago. And of the companies that do have a bonus program, only 41 percent give cash, while 42 percent will give gift cards and 25 percent give food (because, as I noted in a story about this last year, nothing says "I appreciate you" like a 12-pound ham).

Why has this shift come about? For one, many companies have found that bonuses don't work that well. While they may boost morale for a week or two, they don't actually encourage workers to perform any better, especially if everyone gets the same amount. In fact, the best employees may get angry if their low-performing peers receive the same bonuses as they do. Companies are moving away from traditional annual reviews for similar reasons. So in the last five years, companies have shifted toward pay-for-performance programs, and away from the standard holiday bonus.

Business owners: are you planning to give out bonuses this year? Why or why not? Working stiffs: are you expecting one? Can you make a business case for giving out an extra week's pay at the end of the year?

Last updated: Dec 11, 2007




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