Only 37 percent of companies will award a holiday bonus to employees this year,
according to a survey by Hewitt Associates. Meanwhile, the number of organizations
offering performance-based bonuses continues to increase, from 59 percent in
1995 to nearly 80 percent in 2004.
"With increased pressure to improve business results, more companies are
moving to variable pay programs," says Ken Abosch, a business leader for
Hewitt Associates. "Variable pay is designed to help employees concentrate
on company goals and objectives, while eliminating 'entitlement' issues that
often arise with a holiday bonus."
Of the 37 percent of companies that will offer a holiday bonus program in 2004,
nearly half (49 percent) will provide retailer gift certificates, 37 percent
will award cash, and 21 percent will give employees a gift of food (e.g., turkey
Companies plan to spend a median of $550 per employee on cash awards, and a
median of $25 on both gift certificates and food, according to the survey.
"While the majority of companies offering a holiday bonus will spend no
more than 2 percent of payroll on these awards, we're finding that organizations
with variable pay programs are budgeting nearly 10 percent of payroll in 2005
for these pay-for-performance incentives," says Abosch. "They're clearly
sending a message to employees that they will be rewarded for high performance."