Should You Expect a Year-End Bonus?


NEW YORK (MainStreet) — Las Vegas resident Valerie Johnson was expecting a five-figure check from the financial service firm she was working for when the company reneged on its present.

“The owners opted instead to take all of the bonus money to open plush new offices in New York City and West Los Angeles,” she tells MainStreet. “I was so mad, I quit.”

Johnson’s reaction may have been extreme, but she isn’t the only one going without a holiday bonus. According to a survey from the Society for Human Resource Management (SHRM), 40% of human resource managers said it was likely that their companies would eliminate or reduce employee bonuses post-recession.

Additionally, a separate SHRM poll found the number of companies offering non-executive bonus plans has dropped four percentage points since 2006, when 44% of employers said they offered monetary incentives to their employees.  (The numbers actually plummeted from 62% to 50%, if you looked at executive incentives.)

The cuts, unsurprisingly, are directly related to the recession.

“Pre-recession, it made more sense to give everyone a holiday bonus,” Evren Esen, the manager of SHRM’s survey program, says. “Now, organizations are more careful about how they disperse money.”

Companies – especially those who may be on the verge of layoffs – eliminate Christmas bonuses to curb operating expenses and be more fiscally responsible. Those that have kept the incentive in place, Esen says, largely offer year-end bonuses that are entirely performance-based.

So, while employees at thriving corporations like Google might receive a $1,000 bonus check automatically, most who thought of their annual bonus as their employer’s benevolent Christmas gift will have to earn the extra shopping cash this year. The catch for workers helps employers save money and increase productivity.

“Holiday gifts [from employers] may be good for morale, but is it going to make an employee more productive?” Esen says. “Performance-based incentive programs are more effective, because they have a lasting impact on employees.”

According to Eric Mosley, CEO of Globoforce, a consulting firm that helps companies set up employee recognition programs, performance-based incentives are evolving as well. While companies in the past favored paying out awards in December as a lump sum, now they’re paying smaller monetary incentives throughout the year.

“There’s typically a cash component and there’s always an award tied to it,” Mosley says, explaining  these long-term rewards programs have more of a lasting impact on employees than a single annual payoff. He attributes the adjustments to the recession – as  smaller bonuses tied to performance essentially pay for themselves – but also blames the evolving American mindset.

“Today, the workforce operates at a lighting pace. Markets have changed. Product cycles have changed,” Mosley says. As a result, employees today seek immediate gratification. “Companies can’t work on the same time scale as they did 30 years ago.”

The change in I ncentive programs resonates with many present-day employees.

“It's nice if the amount is indexed to effort or achievements,” says Indiana resident Jean Fritz, who used to receive bonuses when she was working as a customer service representative. “Verbal recognition is nice, but tangible rewards are longer lasting and for some of us, more motivating.”

Of course, how much holiday cheer you get from your Christmas bonus (or lack thereof) is entirely based upon perspective. Johnson, who started her own company after quitting her stingy one, calls her zero-dollar year-end bonus the best she has ever received as it caused her to trade her old job in for one with that she enjoys and makes more money doing.

“My new company now gets more revenue than the company I previously worked for,” Johnson says. “It was a blessing in disguise.”

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