As we barrel into the Christmas season, many small business owners are thinking about the annual Holiday Bonus. Owners want to let their employees know that their hard work is appreciated, and workers look forward to having that extra cash to spend on their family during the holidays.
The first recorded Christmas Bonus was given out by Woolworth’s in 1899. Each employee received a $5 bonus for each year of service, up to a maximum of $25.
So what is a small business owner’s typical bonus? For some it could be nothing more than an office party with food, drink, and small gifts…even gift exchanges (which cost each individual employee more and misses the entire message of “you’re appreciated”! ) While there’s no standard rate for performance bonuses, surveys report a range from 1% to 10% of an employee’s annual salary when goals are met. Of course, executive bonuses may be much higher.
Your profits vary from year to year in line with the rate of inflation and whether it’s been a lean or lucrative year. If a company has paid cash benefits in the past, then employees may be expecting and counting on a Christmas bonus to pay for their own holiday expenses and family gifts.
If this year was more profitable than last, then it is time to show your appreciation. Employees, by far, prefer receiving cash bonuses, but if your’e a lean startup or coming off a difficult period, there are other ways to show your appreciation for their loyalty.
At the annual Christmas party, be sure employees understand that this party is in appreciation for them! During the party, recognize each person individually with a compliment and sincere thank you. If appropriate, it’s a good time to announce new job titles or that “John” or “Jane” will now have extra responsibility because of their past performance. Announce new learning opportunities for the coming year that could lead to pay raises. Or give the second most appreciated gift, paid time off, even if it’s just a day.
The post-Covid year of 2022 has seen the so-called “great resignation” with many people quitting their job to start their own business or to change employers and even careers. Plan now how you can show your appreciation this holiday season, whether or not it be a financial one.
Footnote: For more ideas, we suggest reading 12 purpose-filled alternatives to the Christmas bonus from Management 3.0.