Tuesday, October 22nd, 2019

The Dark Side of the Holiday Bonus

By Ellen Rohr on Dec 13 2010 • Filed under Money

Woman with Holiday Bonus Cheque

It starts out with the best intentions. Then it gets weird.

Terry meant well when she started giving Christmas bonuses four years ago. It had been a pretty good year for Sales and profits. And she had been meaning to give bonuses to her Salespeople – Sam, Ed and Jody – for quite awhile. Also, Joanie, her administrative go-getter, deserved something for her loyalty and hard work. Terry cut hefty cheques and basked in the thanks from her surprised and delighted team.

The next year, the team wasn’t about to be surprised. They started dropping hints, especially Jody. Jody talked about using the bonus to get caught up on her credit card bills. She asked, in a nice, polite, way, if Terry would deliver the bonuses before the Thanksgiving weekend because she was planning a trip to her brother’s home up north. Terry cut the cheques.

Year three, Jody approached Terry in October and started in on the Christmas bonus. Was Terry aware that Jody brought in more Sales than Sam and Ed? Wouldn’t it make sense for Jody to get a bigger bonus? Terry explained to Jody that the bonus cheques were going to be smaller this year because one of their big commercial customers had gone out of business. Profits were slim. Jody stormed out of the office. Terry felt sick to her stomach as she cut cheques for the team, a slightly larger one for Jody. Sam, Ed and Joanie didn’t even thank him when they found their cheques in their inboxes.

Now, what about this year? What’s Terry to do?

How about you? You want to do the right thing. You want to let your team know you love them. But maybe you are stuck with an ever increasing, certainly expected, not really appreciated holiday bonus.

If you have been giving a holiday bonus since who-know-when, then you might as well give it again this year. It's expected, and probably already committed to lay-away items at the mall. So, check your cash flow and cut the cheques.

Then, plan a better way to pay for next year. Update your business plan. Clarify your mission and vision for the company. Set goals and ground those goals in your Budget. Consider how to reward the behaviors that help you and your team move in the direction of your goals. Think about how to let your team in on the score, and how to hold them accountable for hitting the numbers and performance standards. And if they exceed goal, consider how they could earn a bonus. That's the way to reward those who go above and beyond without shooting yourself in the foot financially.

After this year’s party, after the bonuses have been spent, let your team know that you are going to revamp the way you pay in the year to come. Those who produce will be rewarded. Those who need help will get it. And the willing and able will WIN.

Here are a few ideas. Aim to clearly communicate these points to your team:

What’s expected of you and what you get in return.

Put your Organization Chart together. Line up the chain of command and put together a simple, half page position description for each box on the chart.

For the revenue producing positions – salespeople – assign sales goals to the positions. These goals are derived from the company budget and a fair portion of the total sales goal should be assigned to each revenue producer. For the production team members, communicate that they are responsible for bringing jobs in on time and done right.

For each position, your responsibility is to provide the training and support necessary to help every willing team member be successful in their position. This gets even easier when you create a corresponding Operations Manual for each position on the Org Chart.

"In exchange for performing to expected, measurable standards you get $__________ in pay and __________ benefits package." (Fill in the blanks.)

Here’s how you move up the ladder.

Craft the steps required to move up the ladder to the next position in the organization. This could include manufacturers’ training classes, trade tech classes, licenses earned, time on the job, formal in-house training, practical tests on technical, Sales and communication skills, etc.

Performance above and beyond the expected is how you can earn bonus dollars.

Should someone deliver sales above goal, those sales are gravy. You can give a bonus on the dollars created in excess of goal. Nice! Make it a small percentage of sales above goal.

You can expect a small gift and a lot of love at our holiday party.

Take most of the year to implement a new way to pay. Clearly define what’s expected. Craft a career ladder of opportunity. Help your team develop the skills needed to be successful. Hold them accountable and deliver bonuses for performance beyond goal.  Play a grand, honorable game of business. 

Then, put the cherry on top. Add a thoughtful holiday gift with a powerful impact. This is not a performance or production bonus. The intention is to have some fun and let your team know you love and appreciate them.


Best wishes for getting the weirdness out of the holiday season. xo$, Ellen


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