It's December, and that means it's bonus, gift, and holiday-party time. So what's a business owner to do?

Before answering that question, it helps to ponder another: What do you want to communicate? Every end-of-year gesture says something different. A cash bonus might say, "Job well done." A gift: "Here's something we think you might like." And the holiday party, it's always seemed to me, says, "Look at all the money we are wasting that could have been better spent elsewhere."

For most of our 11 years here at 37signals, we've given employees cash bonuses. And why not? Everyone likes cash. But the message that cash bonuses convey always felt a bit empty to me. What's more, because our company has been growing consistently each year, those bonuses came to be expected. They stopped feeling special.

Last year, I decided to give a gift instead of cash. I thought about the best presents I had ever received. They were always those that I'd never buy myself and/or didn't even know existed. Once, it was a biography of Nikola Tesla. Another year, a friend gave me tickets to the opera. Each of these gifts expanded my horizons and introduced me to something new.

When I was thinking of what to give employees last year, I decided I wanted it to be something that few people knew even existed; something beautifully crafted and handmade; a one-of-a-kind and fundamentally special object. And I wanted it to be a tool.

That's because at 37signals, we make tools. Basecamp is a tool to help people collaborate on projects. Highrise helps users keep track of their business contacts and relationships. We make software but like to think of ourselves as craftspeople. We are every bit as obsessed with details, beauty, utility, and integrity as a master Japanese bladesmith who crafts samurai swords.

That's when it hit me: a sword.

OK, maybe a sword wasn't practical. But how about the most beautiful kitchen knife in the world? I remembered a video I had seen earlier that year about a fellow named Bob Kramer, a knifemaker in Olympia, Washington. Kramer's knives are custom made, one knife at a time, and are absolutely gorgeous. (Check them out yourself at I decided to ask Bob to make each of our 20 employees an 8-inch chef's knife.

I believe that the quality of the products and tools that you use every day, both professionally and personally, can have a big impact on the quality of your own work and creativity. In other words, if you want to get better, surround yourself with better.

Kramer's knives, crafted from Damascus steel and a variety of hardwoods (we chose ironwood), are beyond better, which is exactly what I wanted for my employees. So I e-mailed Kramer, told him how much I admired his work, and ordered 20 knives. It took Bob a few months to fill the order, because each of our knives took three days to make, and Bob and his assistant are the only ones who make them.

But finally, right around Christmas, we delivered the knives to everyone. We also watched a video Bob had sent along in which he thanked us for the order and expressed how much he enjoyed making this particular set of knives.

Employees were thrilled, and so was I. I like to think that every time they chop an onion or mince a clove of garlic, they'll appreciate the craft and affection that went into making the tool. And with any luck, that craft, dedication to quality, and attention to detail will seep into other areas of their lives—both in the workplace and beyond. And that's way cooler than any holiday party I've ever been to.

Jason Fried is co-founder of 37signals, a Chicago-based software firm, and co-author of the book Rework.