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Holiday Bonuses: To Give or Not to Give?
  • 10 December 2018
  • Jelani Markus

Holiday Bonuses: To Give or Not to Give?

by Jelani Markus

The holiday season is fast approaching. As a small business owner, if you treat your business as your home away from home or consider your employees your work family, one way to recognize their contributions to your success is to provide holiday bonuses. According to a 2018 Bank of America survey, 38% of small businesses give a cash bonus, while between 33% and 41% were offering other perks during the holidays. Why not join in on the fun?

Benefits of holiday bonuses

Holiday bonuses help increase morale and allow you to provide recognition, which increases employee engagement. Hence, bonuses can be a great incentive to get your employees to meet performance targets or to help you meet company goals.


They create an incentive when tied to actual performance, not just to how long your employee has been with the company. Your team should be well aware that showing up and doing the bare minimum is not the way to earn a bonus.

Disadvantages of bonuses

Bonuses could set the wrong expectations. Tying bonuses to performance is crucial because you do not want your employees to expect a nice bonus simply because they received one last year. If you do not have the profits available to provide a holiday bonus that is considered a given, poor morale could be the result.

A motivational loss is created when bonuses do not come with some condition. The fact of the matter is you are rewarding employees for what they did to create more profit. Clear conditions can lead to maximized motivation among your team.

Go for performance or go small

Create a target for your employees to hit. Those who miss the mark that year will not receive a big bonus, unfortunately. But all is not lost. If you want to provide each employee with at least something, offer $25 gift cards or gift certificates to all employees who do not make the performance cutoff. Alternatively, you could provide your employees with a turkey, ham, fruit basket or similar gift that is relevant to the holidays.

Useful alternatives to holiday bonuses

Create a bonus alternative. Pay out unused vacation that employees cannot or will not roll over to the new year in a separate check. The company does not actually incur additional costs, but the employees feel like they received more money.

Give the gift of a donation. Another option for showing appreciation is donate to their favorite charity. If you have only a couple of employees, you can donate directly in their name. Otherwise, it may be best to offer a matching donation up to a certain amount.

Celebrating your employees during the holiday period is a great way to build goodwill. Just remember that if you intend to provide employees with a special gift, you should consider which options will result in a positive boost in morale and employee productivity for the new year.

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