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November 18, 2004
Most Employers Have No Holiday Bonus

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.

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"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 or ham).

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."

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