The Trick To Holiday Bonuses

Every business owner who gives an annual or a holiday bonus wants it to be appreciated. Give it once and employees feel they are always entitled to it. Should a bonus be seen as a gift or is it earned compensation? The first trick to having this process be both a recognition benefit and an act due appreciation is to clearly establish what it is, how it is earned or granted and a few tricks employers can use to keep this from passing into a privilege to be taken for granted.


An earned bonus and a gift are not the same thing. It is also okay for a company to have both–or to have neither. What employees disdain is inconsistency and unpredictability. After all, if you were planning your holiday gift budget or a significant personal expense it is smart to understand and anticipate your compensation. Whether it is a bonus or a gift however, there should be a criteria for the giving and the amount. The factors to account, and plan for are: Company P&L, Actual v. Goals, Group Performance, Individual Performance.

A bonus should have more structure than a gift as it is broadly considered to be earned while a gift is more likely bestowed with more emotion. It may make more sense for an annual bonus not to be at year-end. Especially if the company books are closing at year end and if the company income goes to an owner’s personal income tax it should take several weeks to evaluate the factors that would decide a bonus. Certainly these items are better being objective, clear and laid out in advance.

Giving a gift, whether in holiday spirit or recognition for retention can be a little more tricky. If your “gift” is actually a holiday-timed bonus with objective measures less so, but let’s stick with gifts. Current tax laws make gifts compensation a consideration, but like getting a pair of socks when you hoped for an iPhone, the last thing you want is disappointment in a gift. Material items once were more appreciated but having $400 eight hundred thread count bed sheets show up on your W2 is perilous. As ever, cash is king when it comes to gifts. An unintended disappointment is withholding, that may be unavoidable but promoting you are giving a $1,000 bonus and getting a check for $624 is not getting socks, but it’s not a new iPhone either. Here are a few tricks to making gifts have impact:

  • Deliver gifts with a personal handshake, a direct thank you and eye contact. To the degree these are removed or distant expect the impact to be likewise.
  • Think about the net. Taxes are everyone’s burden but if you want to make a connection and give an employee $1,000 then think about making the gross whatever above that so that the net is the number appreciated.
  • Cash or check? It’s not always practical to use cash but think about how you would feel getting an envelope with a pay stub and five hundred dollar bills rather than a direct deposit stub. There’s certainly risk considerations to that but there’s also a “wow” factor so if your situation allows for cash it might be a cooler gift to get.
  • Explain not only the emotion around a gift avoiding platitudes, (“To the best team in the business…”) but link it to the keys that lead to success or perhaps to the shortcomings that might be “if” something had or will happen the opportunity might be even more–or less. Don’t confuse motivation with excuses but a sense of transparency and variability improves understanding and appreciation.
  • Be consistent, to say, “It wasn’t a good year but…” and then gift, suggests that whatever the results the gift is to be expected. Along with that make emotion consistent and genuine. A $500 gift may be as appreciate as an $800 gift if it is presented appropriately.

Whether you are giving an earned bonus to be congratulated or a holiday bonus to be disbursed with thanks, either way compensation and recognition are intertwined. Having a sincere commitment as the giver and being able to express it is the best opportunity to have the receivers appreciate the intent. As in almost all employer-employee interactions the amount of success is proportionate to the quality of communication.

Happy Holidays.

© 2017 MyEureka Solutions LLC. Follow Tom on Twitter @TomFoxTrainer. Read other articles on business leadership, sales and management at

Do you give or get a bonus or holiday gift? Share this with anyone giving that might want to see it being appreciated rather than taken for granted.

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