More Employers Offer Holiday Bonuses

According to benefits-consulting firm Hewitt Associates' latest survey of large companies (defined as those with 500 employees or more), 41% of employers plan to offer year-end bonuses to all their employees in 2005, compared with 37% in 2004 and only 31% in 2001. The increase reflects the growing coffers of corporations, which are feeling more confident after a few years of healthy economic growth. "That should give them a little more discretion to put the money in the bonus pool rather than hold on to it in case things go wrong," says John Challenger, chief executive officer of outplacement consulting firm Challenge, Gray & Christmas.

Folks who work at small businesses — defined as companies with 100 employees or less — are even more likely to be rewarded. More than half (54%) of employers are planning to issue a companywide holiday bonus, according to American Express's OPEN network for small businesses, a provider of financial tools for entrepreneurs. In fact, small-business owners are planning to increase their holiday gift budgets by 15%, according to Barbara Weltman, a small-business adviser with OPEN. "Businesses are optimistic about the coming year," she says.

Unfortunately this goodwill towards employees doesn't spread across all industries. According to Challenger, the companies feeling the most festive are in the energy, health care, housing development and financial sectors. Folks who work in the airline, automotive and transportation industries, on the other hand, shouldn't expect much. Let's face it: A lot of these folks are just lucky to have jobs.

More Bonuses Tied to Performance
Of course, if 41% of large employers are handing out companywide holiday bonuses, 59% are skipping this popular employee perk. But that doesn't mean employees — or at least top-performing employees — are going empty-handed. More and more employers are now offering performance-based rewards. In fact, 78% of employers have indicated that they plan to give out performance-based bonuses in 2005, according to Hewitt, compared with 59% in 1995.

The appeal here is obvious: Tying a year-end bonus to an individual's performance within the company — or to the performance of the company overall — creates a highly motivated individual rather than a pool of entitled workers, says Frank Belmonte, a human-resource specialist at Hewitt. Typically, companies make arrangements for such performance-based benefits in the beginning of the year, so employees know what goals they're working to achieve.

Better Luck Next Year
No bonus this year? Now is the time to talk to your manager about it, says Bill Coleman, vice president of compensation with Salary.com, an employee-compensation data provider.

If the company isn't rewarding anyone this year because business was slower than expected, ask about alternatives, such as taking an extra day or two off during the holidays, suggests OPEN's Weltman. Many employers — especially small businesses — are willing to reward their employees in ways other than a cash handout.

But if you personally didn't get a check — while some of your co-workers did — chances are your performance didn't meet your employer's expectations. In this case, you should ask your boss what you need to do to get a bonus next year.

Needless to say, you should walk into your manager's office prepared for this chat. Know what your goals were for the year and how you measured against them, Coleman says. Be prepared to provide specific examples of the ways you helped your supervisor look good. Think in advance about your mistakes as well — but don't bring them up unless your boss does. Just be prepared to provide an explanation of what you've done to correct the problem, Coleman says.

Finally, repeat throughout the year. "You should have follow-up conversations with your boss about your performance, expectations and pay," Coleman says. Don't be a pest, but do check in every once in a while to make sure you're on the right track for a merrier year-end reward in 2006.