Conventional wisdom: Feeling generous this holiday season? Food makes a perfectly acceptable holiday bonus--nothing says "thank you" like a ham.
On the contrary: Give your employees what they really want: cold, hard, deeply appreciated cash.
When I was growing up, my mom's boss gave her a $15 turkey as a year-end bonus. Because that's what you really need around the holidays--not money to buy gifts, or put into savings, or help pay bills, but a giant bird to haul home and overcook (sorry, Mom, but it's true).
I always thought that was kind of a crappy bonus. You should be paying your people well enough that they can buy their own turkey if they want one; nobody needs a second turkey. A year-end bonus should be something people want--money--and enough that it shows your employees you really value and appreciate them. That's how we've always done things here, no turkeys required.
Budget for Bonuses
Bonuses also shouldn't be an afterthought, and they definitely shouldn't be reserved for upper-level executives. We set aside a percentage of our profits for bonuses, and you should too.
Even if you're just starting out and don't have much in the way of profits, you should still reward your employees for their hard work. In 2009, the worst part of the recession, our company barely eked out a profit, but we still prioritized bonuses and gave everyone $500.
It may not be much, but you should absolutely do something to show your employees how much you appreciate them. Especially with startups, where the first year can be a hard, uphill climb, an extra check at the end of the year is the best way you can say thank you.
Say It With Cash
Turkey bonuses aren't just a thing of the past, unfortunately. My wife has gotten hams as bonuses. I can't be any clearer about this: Stop giving your employees large cuts of meat in place of actual monetary bonuses!
Nothing speaks to somebody more than cash. They can use it however they want, and it's a clear representation of how much they're appreciated by their employer. Plus--and there's no getting around this--the holidays can be an expensive time of year, and having some extra money to top off a flagging bank account or help pay for presents is the best gift someone can get.
Don't Be a Jerk About It
So you've set aside money for bonuses--how do you distribute it fairly? You don't want portions to be based only on seniority, or anything else your employees can't control, but you still want to reward loyalty and longevity with your company. You also don't want to base the amounts on salary or title; our production people work just as hard as our top engineers, and they should be rewarded accordingly. It's a tricky problem, and the best solution we've found is to use a combination of factors--performance, tenure, effort, and attitude, to name a few.
There's a time and a place to be a hardass boss, but bonus time isn't it. There's a time to be tight with your money, but again, this isn't it. Be generous, and be appreciative. My favorite thing to do here is personally hand out our year-end bonuses and thank all of our employees for their hard work.
I'd highly recommend you do that too. If you've had any success this year, it's because of them. If you're not willing to share that success and recognize their efforts, you don't deserve the hard work they're doing for you.