Holiday bonuses lose out but a good party will do
Many people favour a work Christmas do over a cash bonus, though their feelings may change the day after. Photo: iStock
Staff prefer a heartfelt thanks from the boss or even a night out with their team over a bonus at Christmas, according to human resource experts. Which is convenient as Christmas bonuses are few and far between in this economic climate.
''We're not seeing businesses give bonuses to the same extent this year,'' says Simon James, corporate finance partner with accounting firm HLB Mann Judd Sydney.
What would you prefer? Vote below
''But talking to friends I get the feeling firms are tending to spend more on Christmas parties this year - especially if there have been redundancies - to help improve workplace culture.
''Some businesses are giving out cash bonuses, but it's definitely not a huge part of the market.''
Mr James says that by doubling their Christmas party budget - say from $50 to $100 - businesses can give their staff a much better experience than they would by handing over the cash as a bonus.
From the employee's perspective, a RedBalloon survey of 1855 workers in November, asking how staff like to mark the end of the working year, has shown a team activity or a special meal with colleagues is important. Forty-five per cent of respondents wanted to do a group activity to celebrate, while 19 per cent wanted to enjoy a fancy meal with workmates. Seventeen per cent preferred to leave the office early.
Only 25 per cent of respondents said they receive a gift from their employer at Christmas, but more than half do not receive any Christmas gift from their employer. For the remaining 17 per cent, respondents said whether they receive a gift or bonus depends on company performance.
''Christmas bonuses are not as prevalent now as they used to be. People have moved to annual performance-based incentives and a large number of big organisations no longer pay Christmas bonuses,'' says Della Conroy, a partner at PricewaterhouseCoopers (PwC).
Ms Conroy says businesses now tend to celebrate Christmas with non-financial gifts, especially those that don't attract significant fringe benefits tax. This might include small gifts such as gift cards or hampers. ''That's been the practice over the last few years, although you might see small or family-run businesses still give Christmas bonuses,'' she says.
When it comes to bonuses, says Ms Conroy, employees prefer to know what they are getting if an incentive is part of their salary package. This was a key finding of PwC's research into incentives, Making executive pay work: the psychology of incentives.
''Employees view incentives in a very different light to regulators and the people who design them. They discount the value of complex incentives and those that vest over a long period of time,'' says Ms Conroy.
As for HLB Mann Judd's bonus policy, Mr James says they don't usually give one at Christmas and instead pay above-market salaries. He also says there are ramifications if firms are inconsistent about bonuses.
''In the past we might have given a present like a Darrell Lea hamper, as they were a client. In all the corporate strategy books, bonuses are seen by staff as part of their remuneration. If you give a bonus one year, it's seen as a pay rise and if you don't give one the next year, it's seen as a pay cut.''
Mr James says the trend not to give a bonus also reflects tough trading conditions. ''People are not punching the lights out in terms of performance so there's no bonus. Lots of businesses just don't have the cash to pay one.''
Peter Wilson, president of the Australian Human Resources Institute, says many businesses are exploring alternatives to the traditional Christmas cash bonus.
''People value a short card from the boss as a formal thank you. You'll also find businesses giving a Christmas hamper or gold class theatre tickets. People value them because they have 12 months in which to use them,'' Mr Wilson says.
''Don't underestimate the value of thanks and acknowledgement. People want to feel they are valued. It's about recognising their contribution, not just giving them money.''
Poll: What would you prefer this Christmas from your employer?
- A cash bonus please
- A nice meal with workmates
- A hamper or other gift
- Where's the booze? I'm ready to party
Total votes: 1993.
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