The trees are decorated, the company holiday party is just around the corner and as a company leader, you have to determine how to handle what many of your employees have been looking forward to all year—the holiday bonus.

So how do you determine who gets what amongst your employees?

As with every other aspect of your talent and compensation frameworks, you need to be strategic with the holiday bonuses (that means it’s probably not wise to get swept up in the holiday spirit with little thought toward planning).

Inventive Concepts

Way back in 2007, USA Today featured a story on a bank in Fargo, North Dakota that had an interesting way of giving out holiday bonuses.

All full-time employees received 1,000 dollars, but they then had to donate that money to someone else—what the bank dubbed “paying it forward.:

Part-time employees received $500, and were expected to do the same.

Employees weren’t able to give money to family or coworkers and they had to film themselves donating their money (the cameras were given to employees as a gift by the bank).

Many of the employees got creative and some even came together to pool their money and give a more sizable donation to someone or an organization they agreed on. In addition, workers were given a year-end bonus that amounted to about 4.5% of their salary for the year, and they got to keep those bonuses.

Interesting concept, right? Although such a large sum of money may not be feasible for a small business or an organization with a more limited budget, it is interesting to think about inventive ways to get employees into the holiday spirit. It tends to be a great way to engaged employees around the holidays and leave them feeling energized as they finish out the year on such a positive note.

Other Ideas

Even if you’re not planning on the pay-it-forward idea as a way to structure bonuses this year, there are some other ideas you can consider.

• If you want to take a less systematic approach to bonuses, base them on how much revenue your company generated during the year. This makes people want to work harder throughout the year if they know their bonus depends on it, plus it really promotes the concept of everyone sharing in the success of the company. It’s a unique way to pay for performance around the holidays and let employees know they’re appreciated for their hard work.
• If you’re not able to give a really big cash bonus, you can also consider giving personal gifts to each of your employees to go along with what you’re able to give monetarily. This is a good idea for smaller organizations. Choose something that’s meaningful for each employee and it will show them they’re appreciated, even if you can’t hand out a huge sum of cash to everyone.
• If your bonus system is based on a pay-for-performance concept, take the time to have a personal discussion with everyone when you’re handing out bonuses. Let your employees know why they got the bonus they did, whether it’s positive or negative. It really gives more of an impact to overall performance reviews and can serve as a great motivating factor for employees to keep up the great work, or to understand where they need to make improvements.
• If you’re simply unable to give out a holiday bonus this year, make sure workers know that. It can be disappointing or even detrimental to budgeting plans of your employees if they’re thinking they’ll be getting a bonus and it doesn’t happen. If you know you just can’t manage it, tell employees in advance but think about doing something thoughtful, like a handwritten card for everyone that lets them know you really do understand how hard they’re working and that you’re grateful for it.

Do you have any creative ways to determine holiday and end-of-year bonuses?

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