Survey: Companies Providing Bonuses, Parties Despite Weak Economy

According to a recent survey from Lincolnshire, Ill.-based Hewitt Associates, a global human resources consulting and outsourcing firm, most companies are doing their best to bring holiday cheer to their employees this season despite dismal economic conditions. Although the size of bonuses and value of gift cards given may be slightly lower than in the past, many companies are trying to stick with the tradition.

Hewitt's 2008 holiday survey of more than 160 organizations reveals that of the 42 percent of companies offering holiday bonuses, this year more than half (52 percent) will provide them in the form of cash--spending an average of $863 per employee. Forty-two percent will give gift cards or gift certificates averaging $76 per person, and 16 percent will give food (e.g., ham or turkey). According to the survey, the employers that do provide holiday bonuses do so to show their appreciation (57 percent), for goodwill or morale (18 percent), to maintain tradition (12 percent), and/or as an incentive for employees to improve business results (8 percent).

"In the current economic climate, it seems to defy logic that more companies are offering holiday bonuses," said Ken Abosch, Hewitt's North American compensation practice leader. "However, with so many companies struggling, employee morale is down across the board. Employers that can manage are paying out some type of holiday bonus this year in order to recognize and thank employees for their hard work."

Beyond holiday bonuses and gifts, most employers (71 percent) also are continuing to throw holiday parties this year as a way to recognize and say thank you to hard-working employees. Of these, 22 percent are spending $5,000 or less on their parties, 19 percent are paying between $5,000 and $10,000 and 20 percent are spending between $10,000 and $25,000, according to the survey. Of the companies polled, 51 percent said they hold parties after work hours, 62 percent host them at off-site locations, and half allow employees to bring significant others. On average, 69 percent of employees attend their company's holiday party.

While holiday bonuses continue to be a way for companies to express thanks and appreciation, most employers are continuing to focus on variable pay programs--performance-based rewards that must be re-earned each year--as the main vehicles for rewarding and compensating employees. According to Hewitt, 90 percent of employers currently offer at least one variable pay program compared to 72 percent in 1998.

"Over the past decade, we've seen holiday bonuses transform from a main rewards vehicle into something that's more of a 'token of appreciation,'" explained Abosch. "Today, more and more companies are tying incentives directly to performance in order to give employees a vested interest in the success or failure of the company and to take away the entitlement mentality that comes with bonuses that are given arbitrarily. This is particularly true in tough economic times, where higher productivity and performance have a direct impact on bottom-line business results. In today's world, employees who are top performers will be the ones best rewarded."

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