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The Death of the Year-end Bonus

One of Scrooge's first panels in Christmas on ...

The year-end bonus has become part of a mythical story told by older generations of workers to the young whippersnappers in the office. These magical gifts (along with fruitcake and meat baskets) were a sign of good tidings and profitability. Or even if things weren’t profitable, people still expected the bonus to somehow show up …

In reality, only 53 percent of companies provide year-end bonuses. The Great Recession probably squashed most bonuses, and financial strains have forced companies to change the way they reward employees. My personal opinion, though, is that the slow death of the year-end bonus comes from the fact that people feel entitled to get it. The gift became an obligation.

Rewards and recognition are supposed to encourage the right behaviors to make a company successful. If the company was profitable, the bonus was a way of saying, “Hey, everyone, thanks for working hard for a great year!” But what if it wasn’t a great year? The company might have still provided a bonus just to say, “Thanks for sticking with us … please stick around even though things are getting bumpy.”

And when the company couldn’t even pay the light bill, the bonus was still expected. A Pavlovian expectation of getting a bonus at the end of the year was set, even though the original gift had been linked to profitability. It’s not a gift anymore. And it’s not fun to give an obligation.

What if the year-end bonus went back to being a gift? And what if the gift wasn’t always money? Here are a few ideas for non-monetary year-end gifts:

  • Close the office for an extra day around New Year’s
  • Give managers flexibility for how they’d like to reward employees
  • Add festivity to the office so the end of the year isn’t so stressful

Finally, think about rewarding employees throughout the year. Tying rewards to performance helps get people invested in the mission of the company all year long, not as a last-ditch effort in December. And then if you do provide a year-end gift, it really is a gift. Not an obligation.