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GIVE BUSINESS GIFTS THAT COUNT

It's Been a Tough Year for Employees Too

Most companies plan to throw holiday parties and some will dish out year-end bonuses. Here's how to pull off either without a hitch.
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While times may still be tough at many of the nation's small businesses, more of them still plan to shell out for holiday parties and year-end gifts than in previous years.

According to a new Career Builder survey, 59 percent of businesses are planning to host a holiday party this year, and 45 percent will be handing out year-end bonuses. If you're sitting on a few extra pennies this year, and you want to show your employees some love, here are some dos and don'ts:

Bonus Dos:

-Follow your company bonus plan. If you have a written plan with percentages attached with performance ratings or salary grades, or even job titles, follow that. You're free to change it at the beginning of the next year, but under no circumstances do you change your policies midstream.

-Mark up for taxes. Uncle Sam doesn't care that it's a Christmas present. He wants his taxes, and by golly he'll get them. So, if you say, "We're giving everyone a $500 bonus this year!" Get your friendly payroll person to gross that up--that is, inflate the face value of the bonus to account for the employee and employer tax liability. So, in reality everyone is receiving a higher figure, but they walk away with $500 in hand.

-Limit manager discretion. If you have a plan, follow it. If you don't, don't simply hand a pot of cash to managers and tell them to divide it up appropriately. If you don't feel comfortable taking the stand in court to explain why John got a $1,000 bonus and Carolyn got $500, then you're doing it wrong. Managers need to work within guidelines.

Bonus Don'ts:

-Make a charitable donation in lieu of a bonus. Yes, it's noble to donate to charity. Please do. Do it with your own bonus. Do not tell your employees that you've made a generous donation in their names. It's not generous. It's rude. And furthermore, while I have charities that I support and you have charities that you support, the twain may never meet. Unless your business is extremely small, you'll be hard pressed to find a charity everyone supports.

-Forget the paperwork! Bosses think it's fun to hand out envelopes of cash at the company Christmas party. Good. But, included in that envelope needs to be a statement regarding the taxes and such, because, by law, that has to be withheld, and it comes as a nasty shock when the employee's regular paycheck is several hundred dollars short because of taxes withheld for the bonus. This is especially critical if you don't gross up.

-Bonus for the boss, none for the workers. You own the business, so it's certainly your right to do what you want with the profits. But, if you tell your employees that there is no money for bonuses, and then buy yourself a new car, or take a fancy trip, or something else big, your employees will resent you.

Party Dos:

-Invite everyone. No tiered parties. If you can't afford something big for everyone, do something small for everyone.

-Have fun. If the boss isn't out there, having a good time, the employees will not be having fun either. Keep the "party" in party.

-Stay in budget. A company party is paid for by the company, not by the guests.

Party Don'ts:

-Get drunk. No one should get drunk at a company party, but most of all, the boss should not.

-Have obligatory attendance. A party is a party. No one is required to go to a party, even when it's thrown by the boss.

-Tell people there's no money for a bonus because you spent it on a party. If there's enough for either a $50 bonus for everyone or a party, the party is fine, and it may do better for morale than a bonus. But, don't go around saying that. It makes you sound like they are making employees sacrifice for a party. Not good. Here are hints for throwing a cheap holiday party if you're working within a slim budget.

Overall, parties and bonuses are great things to spread cheer during the cold and dark end of year. Use it to your advantage to keep everyone happy and full of holiday cheer.

Last updated: Dec 11, 2013

SUZANNE LUCAS | Columnist

Suzanne Lucas spent 10 years in corporate human resources, where she hired, fired, managed the numbers, and double-checked with the lawyers.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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