In an era of tighter cost controls, the tradition of the year-end bonus or gift may be fading, at least beyond the confines of Wall Street. About 43 percent of human resources executives said their companies do not award year-end bonuses, perks or gifts to employees. That is up from 2007, when a similar survey found that 28 percent of companies never award year-end bonuses.
The survey by global outplacement consultancy Challenger, Gray & Christmas Inc. found that among the 53 percent of companies that do award bonuses, half give employees either a non-monetary gift or a nominal monetary award valued at less than $100. Of the remainder awarding some type of year-end bonus, 31 percent give all employees a monetary bonus based on the company’s overall performance, while 19 percent give bonuses only to selected employees based on the individual’s performance.
“There could be several reasons for the shift away from year-end bonuses. Certainly, the economic conditions of the last four years have contributed,” said John A. Challenger, CEO of CG&C. “In addition, some companies may have found that year-end bonuses are not the morale booster they once were and that there are more effective ways to reward high performers, while increasing the morale and loyalty of all employees. In many companies, year-round efforts may have replaced the end-of-the-year gesture.”
For the employers that continue to award monetary bonuses, three of four indicated that the size of this year’s bonus will be about the same as in 2010, according to the Challenger survey. Only 17 percent of respondents said their companies were planning to increase the size of bonuses. About 8 percent said this year’s bonus will be lower than a year ago.