As Christmas draws nearer, many business owners have asked me how they can love on their teams. It’s the end of the year, and it’s been a rough one. So, it isn’t uncommon for business owners to want to show their love and appreciation for the people that help their businesses day in and day out. But how do we properly bonus employees? That’s the subject of the day. Join me as I detail how to give an end-of-year employee bonus!
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A recent survey by Robert Half found that 52% of workers expecting to receive a year-end bonus, planned to add the money to their long-term savings. Another 47% hoped to use the money to fund a vacation in the new year. And 46% said they would use the bonus pay to pay down debt. Paul McDonald, senior executive director at Robert Half says, “Bonuses can be easy to implement and have universal appeal because employees appreciate the flexibility of being able to use them however they see fit.”
Anytime we bonus our employees, there needs to be “why” behind it. Sometimes, bonuses are performance-based and are earned by the team reaching a certain performance metric. Other times, we might provide an end-of-year employee bonus for more philanthropic reasons. Whether you’re providing bonuses to foster goodwill or to reward a job well done, it’s important to be clear about why the bonus is being delivered.
Keeping that in mind, an end-of-year bonus can be easily explained in the same manner. Either they are intended to generate goodwill and positive company culture or they could be a one-time incentive for employees working toward specific projects and goals. Perhaps you’re honoring an employee for reaching a milestone anniversary with the company. Whatever your reason may be, it is important to make it clear so you avoid creating a culture of entitlement.
Depending on the size of the company, there may be varying levels within the employee structure. It’s not uncommon to have executive level, management level, and support level employees within a business. In fact, we have a similar structure in my own business. When you have these different levels, it’s a fairly regular practice that one level would receive an end-of-year employee bonus while the other levels don’t.
Conversely, there are times when you want to provide an end-of-year employee bonus to the entire team. The different situations require different means of communication. If you’ve had a great year and decide to bonus the entire staff, then a group announcement is appropriate. But if you’re providing individual performance-based bonuses, then you need to schedule one on one times with the employees that you intend to bonus. Additionally, these meetings need to be separate from a regular performance review.
Likewise, it’s important to explain how the amount of the bonus was determined and when they can expect to receive it. If the bonus was based on previously set metrics for the employee, and you tracked and discussed their progress throughout the year, this conversation will be straightforward. It will be an affirmation of what you and your employee already understood.
Now, I’d like to take a look at some of the ways that you can provide an end-of-year employee bonus. It may not always be possible to write a check every year. Therefore, it’s always a good idea to have a backup plan. In years where you may not be able to afford to provide monetary bonuses, you might consider offering your team additional time off. The work/life balance can be a difficult thing to manage in today’s fast-paced world. That’s why many employees appreciate the ability to take an extra day off here and there without it affecting their paycheck.
Likewise, thoughtful gifts and gestures are greatly appreciated by employees and show that you truly value them. This could be anything from concert tickets to gift cards. We have one person on our team that brings a gift basket to the office with ham, cookies, and candy every year. It doesn’t really matter what it is. What matters is that you’ve put some thought into it.
On the other hand, if you’ve had a great year in your business, you might give cash. According to a Robert Half survey, 34% of employees love receiving cash. Now, it doesn’t have to be paper money. It could be virtual gift cards. I know a lot of people really love virtual gift cards because they can go online and spend them immediately. So, these are some great ideas for providing an end-of-year employee bonus. But are there bad bonus ideas?
For all of the good bonus ideas that there are, there is an infinite number of really bad ones. For example, don’t simply do what’s convenient. If your company has a partnership with a clothing company, don’t just hand out a bunch of branded t-shirts. Your employees will see through that and it comes across as insincere. In the same vein, don’t do something random. Giving gifts is fine as long as you’ve put some thought into them. However, if you have a team member who is a vegetarian and you give them a jerky of the month subscription, you might as well have given them nothing. Know who you’re giving a gift to and give them something that they will enjoy.
Having an office Christmas party can be a wonderful thing. It provides a chance for everyone to unwind and can be a great team-building experience. But don’t offer this in lieu of a bonus. When you spend so much of your week with the people you work with, getting to hang out with them on your day off isn’t really a bonus. In fact, only 1% of employees said that they would prefer an event over a bonus.
Similarly, giving your team the bare minimum can create resentment rather than goodwill. Imagine working for a very successful business, showing up to work, and being handed a $5 gift card to the local hardware store. It sends the message that they weren’t worthy of your thoughts or your money. This can be even worse than receiving nothing at all. And people have been known to quit over not receiving a holiday bonus. But the worst bonus idea of all? Fruit cakes. Nobody likes them. Don’t do it!
Whether you’re in a position to give the biggest bonuses you’ve ever done or just a small thoughtful gift, I hope that this has given you something to think about. There’s a lot more to providing your team with end-of-year bonuses than one might think. As the year comes to an end, try to choose something that shows you care for your team. If you’re considering a virtual option, check out our list of flexible options.
Friends, life is hard, it’s complicated. But life is good. Choosing the right end-of-year employee bonus for your team can be frustrating. But it doesn’t need to be. With a little thought, showing some love for your team can at least be financially simple.
For more information on this and other topics that are pertinent to your business, or for more individualized help, schedule a meeting with us. The Financially Simple team is always here to help.