Holiday bonuses remain consistent, survey shows

While most U.S. companies don't offer a holiday bonus, those that do are not being influenced by a poor economy, according to Hewitt Associates, a global outsourcing and consulting firm.

Hewitt surveyed 432 companies for its "2002 Holiday Bonus and Gift Study," and found that 67 percent will not offer any type of holiday bonus (e.g., cash, gift or food) this year. This is consistent with recent trends, as Hewitt studies have shown that the percentage of companies not giving a holiday bonus has ranged between 64 percent and 69 percent since 1999.

Specifically, the 2002 study reveals that 51 percent of the companies have never had a holiday bonus, while 16 percent had a program that was discontinued. Of those companies that canceled their holiday bonus initiatives, 7 percent did so before 1980, 9 percent did in the 1980s, 47 percent did so in the 1990s, and 37 percent discontinued their programs between 2000 and 2002.

Additionally, companies reported cutting holiday programs because of cost (59 percent), entitlement issues (34 percent) and the development of pay-for-performance plans (24 percent).

"It's not surprising that some companies are continuing to offer a holiday bonus, since this type of award is more symbolic than substantive," said Ken Abosch, a talent management business leader for Hewitt Associates.

"In other words, companies don't use these awards as performance incentives. Those organizations that are seeking alignment between performance and awards, have turned their focus to variable pay incentives, which are designed to help employees concentrate on company goals and objectives, while eliminating entitlement' issues that often arise with a holiday bonus plan."

The Hewitt "2002-2003 U.S. Salary Increase Survey" shows that 80 percent of companies have at least one type of variable pay/pay-for-performance plan in place, up from 70 percent in 1999 and 51 percent in 1991.

The Hewitt study also shows that of the companies that never offered a holiday bonus program, nearly half (47 percent) said it was due to cost, 40 percent simply never considered such a program and 38 percent said that a holiday bonus was not consistent with their reward philosophy.

Cash bonuses

Conversely, of the 33 percent of companies that have a holiday bonus program, 39 percent provide a cash bonus, 36 percent give a gift certificate to a local retailer and 28 percent reward employees with a gift of food. In contrast, of all 432 companies surveyed, 64 percent host a holiday party.

In addition, Hewitt's research found that 62 percent of the companies providing holiday bonuses budgeted less than 1 percent of payroll expenses for these awards, while 19 percent budgeted between 1 percent and 2 percent of payroll.

Meanwhile, the monetary value of bonuses and gifts varied greatly by award type.

For instance, cash awards tended to have the highest value, with the companies spending a median of $200 per employee. For gift certificates, organizations will spend $25 on each worker, while a food gift costs a median price of $20 per employee.

"For some companies, a holiday bonus is part of their culture and helps define the organization," said Abosch. "Meanwhile, other organizations use a holiday bonus as a way to build morale and thank employees for their efforts during the past year."