How To Give A Company Holiday Gift or Year End Bonus

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 can feel they are annually entitled. Should a bonus be seen as a gift or is it earned compensation? The first trick to having this process be both a benefit of recognition and an act of appreciation is to clearly establish what it is, how it was earned or granted. There are a few tricks employers might use to keep their generosity from being taken for granted.

Establish the Rationale

An earned bonus and a gift are not the same thing. It is not uncommon for a bigger company to have both–or for some to have neither. What employees disdain is inconsistency and unpredictability. 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 results, group performance, individual accomplishment(s).

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 or intention. It may make more sense for an annual bonus not to be at year-end where they can be tied up in holiday spirit. If the company income goes to an owner’s personal income tax it can likely take several weeks to evaluate the final performance factors that would decide a bonus. While books can close the accounting can often lag with variables to consider. Certainly these items are better being objective, clear and laid out in advance but reality of the now or worry for the near future can get in the way.

Giving a gift, whether in holiday spirit or recognition for retention can be a little tricky. If your “gift” is actually a holiday-timed bonus with objective measures less so, but let’s stick with gifts. Current tax laws regarding gift compensation are 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 as income on your W2 is perilous.

As ever, cash is king when it comes to gifts as the material of choice but it pails in comparison to the human connection that may be at the source–or not. Withholding 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 so keep the giving and the actual getting in perspective.

Here are a few tricks to making gifts have impact:

• Deliver gifts with a human connection; a handshake, a direct thank you and eye contact. To the degree these are removed or distant expect the impact may be diminshed.
• 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 $500 bills rather than a direct deposit stub. There are certainly risk considerations to that but there’s also a “wow” factor so if your situation allows for cash it might be perceived as a very cool gift to get.
• Explain not only the emotion around a gift and avoid platitudes, (“To the best team in the world…”) but link it to the keys that lead to success (“To the team that successfully launched brand X”). It’s okay to note the conditions of factors out of your control but don’t confuse motivation with excuses pro or con. A sense of transparency and variability of conditions 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 easily be appreciate more than an $800 gift if it is presented appropriately.

Whether you are giving an earned bonus with a congratulation or a holiday bonus to be disbursed with thanks for loyalty 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, create loyalty and have a marked result on company culture. As in almost all employer-employee interactions the amount of success is proportionate to the quality of communication.

Happy Holidays.

©2019 MyEureka Solutions LLC. For help with your RECOGNITION STRATEGY or other BUSINESS THERAPY insights contact or follow Tom @TomFoxTrainer, on LinkedIn or at www.myeurekasolutions.com/thoughts. His recent book: Business Therapy: Ideas and Inspirations To Help Build Sales, Leadership, Management, and Personal Performance is available on Amazon.