No Bonus? No Surprise

Most employers find other ways during the holidays to show appreciation


If you're hoping for a Christmas bonus from your employer this year, you might as well believe in Santa Claus.  The tradition of year-end cash gifts -- bonuses that are not tied to performance -- is dying, experts said.

About 12 percent of employers will give out cash bonuses around the holidays this year. An equal number have discontinued such gifts during the past two decades, according to an annual survey from human resource consultant Hewitt Associates.

"It's very rare to find companies that will give an across-the-board bonus to everybody," said Paul R. Dorf, managing director of Compensation Resources Inc. in New Jersey.

"I think companies still care very much about their employees, but they're wondering why they should give them something that has very little motivational value."

Small, family-owned, long-standing businesses are most likely to cling to the tradition of Christmas bonuses, according to those who study employee compensation.

Harris Jewelers, which has operated in Wilmington for 75 years, is one such company. The roughly 30 full- and part-time employees at the chain's three area stores always get a little extra in their paychecks this time of year.

"We've done it for years," said Ronald Cohen, one of the principals of Harris Jewelers along with his uncle and brother. "We try to reward our employees for working hard. I know a lot of stores don't do it anymore, but we still believe in that."

Cohen said the size of each employee's bonus depends on how long he has worked at Harris Jewelers, though he did not give specifics.  Kathy Coleman, who has worked for Harris Jewelers for 18 years, said she appreciates the gesture.

"It's his way of sharing the profits with employees and expressing his gratitude for their hard work during the year," she said. "It's very nice."

More often, though, bonuses these days are directly tied to performance, either individual or companywide.

Companies have decided that holiday bonuses not related to performance "don't make an impact," said Raylana Anderson, a human resource consultant based in Illinois.

"People start to expect the money," she said, "and heaven knows employers don't want to promote an entitlement mentality."

The majority of companies giving holiday bonuses budgeted less than 1 percent of their payroll expenses for the awards this year. But they budgeted nearly 10 percent of the payroll for performance-based bonuses, according to Hewitt Associates.

"I think it's a fundamental change in the way companies are looking at their businesses," Dorf said. "They just want a mechanism to improve performance and drive their companies forward."

Sometimes, the payoff is stock

J.P. Morgan, which employs about 1,300 at its financial services operation in Newark, gives out year-end bonuses based on a combination of individual and companywide goals, said spokeswoman Nancy Gervay.

Ciba Specialty Chemicals gives bonuses in April to its 225 employees at its pigment manufacturing plant in Newport. The awards are based on the financial performance of the company's colors division, of which the Newport plant is a part.

At Class I.Q., a 4-year-old software testing business in Wilmington, employees are awarded stock options based on their contributions during the preceding 12 months.

The options are far more important than a nominal Christmas bonus, said Class I.Q. President Joe Burns. They are a key part of employees' compensation, even though the company has not gone public yet.

"In the tech business, it's all about stock options," Burns said. "Our employees are not worried about Christmas bonuses. It's all about how many options they can get. It just happens to come at this time of year."

In most cases, such performance-based payouts add up to much more than holiday bonuses ever did, says Dorf at Compensation Resources.

"What used to be bonuses have become incentives, and they've become much larger," he said. "Companies are rebelling against giving things employees take for granted."

Although the number of companies giving straight cash awards as a goodwill gesture is shrinking, employers are not all Grinches at holiday time. Some still give their employees food, gift certificates or a small gift, and most still host Christmas parties for their workers.

"We have a children's holiday party so employees can bring their kids in," said Gervay of J.P. Morgan. "We have Santa and Frosty and the elves, and it's a lot of fun."

Winner Automotive Group had its company party last week at the Riverfront Arts Center, complete with good food and "The Fabulous Greaseband," said director of marketing Charlie Tomlinson.

The company, which owns several area car dealerships, also gives out turkeys to its nearly 500 employees, he said.

About 22 percent of employers will give out some kind of gift this year, such as food or a gift certificate, according to BNA Inc., a business publisher based in Washington, D.C.

The average value of such non-cash gifts is about $20. The average value of cash bonuses is about $150.

Managers at Berger Instruments, a 20-employee Newark operation that makes fluid analysis machines, gave their workers department-store gift certificates last year and may do so again this year.

Berger President Mark Shuman admitted the certificates -- for about $200 each -- were "fairly insignificant."

"We were trying to show our appreciation without breaking the bank," he said. "If we had the money, we would have done performance-based [awards]."

While 12 percent of employers have discontinued holiday bonuses during the past few years, the majority of large employers – 52 percent -- have never offered any kind of year-end awards, according to Hewitt Associates.

Neither of Delaware's two largest private employers, the DuPont Co. and MBNA Corp., offer any corporate-wide holiday bonuses.

"Everybody in the company is on a performance-bonus plan of one kind or another, but nothing that's tied to Christmas," said Steve Boyden, a spokesman for Wilmington-based MBNA.