Updated March 29 at 3:29pm

Bonuses are a reward


Sure, nobody wants to be labeled a Scrooge. But if you’re among the roughly 50 percent of U.S. businesses (and shrinking) that still offer traditional year-end bonuses, it might be time to join the 21st century – and plan for something different in 2013.

Too many small-business bonus plans operate on autopilot, under “conventional wisdom” that offering year-end bonuses works. But these ritualized holiday handouts can actually undermine your mission, strategy and goals.

“As an employee-incentive strategy, the traditional year-end bonus is better suited to the 19-th century world of Charles Dickens’ “A Christmas Carol” than today’s workplace,” said employee recognition expert Michael Levy, CEO of Online Rewards, who’s created incentive programs for a wide range of large and small companies.

In fact, the year-end bonus or gift has already been fading for some time, according to surveys conducted by the human resources firm Challenger, Gray & Christmas. Five years ago, nearly three-fourths of companies surveyed said they offered yearend awards – a figure that’s plunged to just half, and appears headed lower.

Here are reasons to ban the yearend bounty and look for new ways of getting more bang for your bonus buck:

• Year-end bonuses have little impact on performance. Traditional year-end bonuses as applied at most small businesses simply don’t have a significant impact on employee behavior. For the most part, they are symbolic rather than strategic.

• Year-round programs are better at strengthening relationships between employees and business owners or managers. By offering smaller but more frequent rewards throughout the year, you’ll regularly promote behavior that advances your overall business goals and creates a more lasting positive perception among employees – and customers, too.

• A “meaningful” bonus might be much less than you think. Numerous studies show that most employees merely want to be recognized for their ongoing contribution to the business. This doesn’t require a Wall Street-sized check. “Many workers are happy with a $25 gift certificate to a local store or restaurant,” said John Challenger, CEO of Challenger, Gray. “Others would be happy with an extra day or two of paid vacation at the end of the year.” •

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