No Bonus in Holiday Stockings for Most

November 18, 2003 ( - Nearly two-thirds (65%) of US companies will not offer a holiday bonus this year.

This should not come as a surprise to most employees, as 2003’s numbers continue arecent trend, with the number of companies not awarding a holiday bonus ranging from 64% to 69% since 1999, according to a survey conducted by Hewitt Associates.Last year, Hewitt found67% of companies would not being offering any type of holiday bonus. (See Companies Playing Holiday Scrooge ).

Additionally, a plurality (47%) of companies not giving a bonus this year have never offered one, leaving only 17% of the companies not offering holiday bonuses to have canceled such a program. Most of the cancellations (52%) occurred between 2000 and 2003, with cost being the overwhelming reason (52%), followed by entitlement issues (32%) and development of pay-for-performance plans (29%).

Not surprisingly,of the companies that never offered a holiday bonus program, 41% said it was due to cost, 41% never considered such a program and 23% said that a holiday bonus program was not consistent with their reward philosophy.

The reward philosophy and entitlement issues speak to a bigger trend in employee compensation – a move toward variable pay-for-performance plans. These plans are being utilized by nearly 80% of companies in 2003, up from only 51% in 1991, according to Hewitt.

“In fact, most organizations are seeking a direct connection between performance and awards, and are now focusing on 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,” according to Hewitt consultant Ken Abosch.

Holiday Cheer

For the 35% of companies planning on playing Santa Clause in 2003, 28% plan to provide cash bonuses, 28% will give retailer gift certificates and 23% will reward employees with a gift of food. These organizations said they continue to award holiday bonuses as a way to:

  • say thank you/show appreciation (54%),
  • uphold tradition (22%) and
  • boost morale (19%).

Overall, the majority (74%) of these companies budget less than 1% of payroll expenses for the awards.

The monetary value varies by award type. For example, companies plan to spend a median of $300 per employee on cash awards, a median of $25 on gift certificates and a median of $20 for food.

Most companies (68%) though do not intend to keep their employees out in the cold and plan on hosting a holiday party this year. This is up from only 64% planning on a holiday party last year.

Of these, 29% of organizations plan to spend $5,000 or less on their holiday parties, 20% will pay between $5,000 and $10,000, and 20% will spend from $10,000 to $20,000. In fact, the median amount a company will pay for a holiday party this year is $11,050.

Hewitt Associates surveyed 435 US companies for its “2003 Holiday Bonus and Gift Study.” Copies of this study are available by calling the Hewitt Associates Publications Desk at (847) 295-5000.