re: Update: Christmas Bonuses

Where I work the Christmas bonus is a percentage of pay for the year that goes up or down based on company performance. It’s been as high as 29% but was 5% last year. This year I know they are saving 40% in taxes so if they pull that 5 percent crap I’ll be searching for something else.

We also have a Christmas party that has been toned down from previous years (no alcohol). I’m fine with that if the money goes to a better bonus.

Only checking in to say how much it sucks to not have a bonus because of "no funds" in a public school system.

Carry on you wonderful people who have made far better financial decisions than I

I'd cancel the party and put those funds toward bonuses. I'd also give as close as possible to last years bonuses because your employees are relying on them. They shouldnt expect to always get extra but you have made it routine.

While giving them out, explain how tough it was and the new metrics youre using to calculate bonus potential going forward.

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I'd cancel the party and put those funds toward bonuses.

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I don't agree with this at all, unless he's spending a ridiculous amount for the party we're talking probably less than 100 bucks per person saving.
So in essence, you end up with two disappointments.

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Good Morning MT-

My family owns a business and in years past we have always provided Christmas Bonuses' for our employees. Typically we assign a dollar figure based on tenure with the company with the highest payout around $5,000. We have done this since we were a much smaller company and now we've just hired our 43rd employee which is approximately 10 more than we had this time last year. In 2017 we gave out over $60k in bonuses and if we were to use the same logic this year that number would be over $70k. We always knew that eventually we wouldn't be able to continue to give out these substantial gifts and I believe that time is now.

We have had a flat year revenue wise and lost money profit wise due to higher than expected COGS. We have always had a slim payroll for our revenue which is why we've had the expansion in labor this year.

Any feedback on the best way to ease the blow to our employees that they're not going to be getting the same bonus that they have expected in the past. Some people will receive the same as last year while other will receive less. The example I used earlier of the $5k payout will be maybe $1k this year. We would love to give the normal bonus this year, but we just can't.

Any advice on how to approach this would be appreciated. My thoughts were to bring everyone together before our Christmas party (which is when we usually give these out) and explain to them that the bonuses will not be as rich as years' past.

Thanks in advance and Happy Holidays.

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A few thoughts, based on what you have said and given that there is a long time tradition of this and therefore an expectation.

1) I think if you can find a way to keep people as flat as possible do it. However you need to set the expectation that going forward bonuses are just that and are not guaranteed.

2) If at all possible try to meet with each person on one tell them the situation and ask them what they were expecting. Transparency is the best policy.

3) DO NOT DO THIS IN A GROUP SETTING

4) Try to hammer home that ownership/management is taking the biggest brunt of it.

5) CANCEL THE CHRISTMAS PARTY. I'm not sure I know a single person that wouldn't rather have $$$ in their pocket to spend at their discretion instead of going to a company party. I think it goes a long way to tell people we'd rather pay.

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roll out clearly defined metrics for bonus payout

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I agree with this.

Our bonus structure is clearly defined and based upon company profitability. We have quarterly meetings where profitability is discussed and we have an idea if we're on track to receive the bonus or not. Bonuses shouldn't be just randomly given regardless of company profitability.

So headcount is up 30%, revenue is flat, and bonuses in the past were expected and generally paid based on senority.

If you have been doing this forever, it's expected.

Understand that if you dramatically cut or eliminate the bonuses this close to year end, you are going to destroy employee morale and you are going to cause a whole bunch of issues.

Employees aren't stupid. They see there are more of them running around this year, and there isn't more business. So they probably are already nervous as it is. Cut their bonuses by 80%, and you may soon find they aren't so loyal to you anymore. They are going to assume the company is in trouble, and head for the exits.

I would do everything I can to try to keep the bonuses as close to normal as I could.

But more importantly, it's time for an all-hands meeting, where you discuss the growth of the company, future prospects, etc. I would also work on a new bonus structure that isn't tied to a holiday, but instead to performance, and present that to the employees.

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hat being said you really need to switch over to performance based bonuses. For instance a bonus based on revenue growth, a bonus for lowering COGS as a % of sales, customer satisfaction, etc.

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In this scenario, don't the salesmen basically get all the bonuses?

Personally, I think salary should be the performance indicator and bonuses should be equal across the board.

A $3000 bonus may not mean anything to the director of sales, but to the receptionist it may mean paying off the car note.

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You gotta figure out a way to pay these ppl. If you want to keep them, that is.

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Why not both? Create annual bonuses that everyone gets, and performance bonuses that the special ones get? Use two separate pools of funds. I'm sure the special ones wouldn't mind getting a quarterly bonus check.

Give out the same bonuses. Scale back company party to pot luck type deal. Mention in January about how it’s becoming to expansive and the company really lost money. Mention there will still be bonuses but it will be based on company performance and not to expect it at the end of the year. It should be looked at like what it is. A bonus.