Companies less like Santa, more like Scrooge

Only one-third of Canadian firms plan on handing out holiday bonuses to employees, but most will have a holiday party

Companies continue to be a bit more like Scrooge than Santa when it comes to handing out holiday bonuses.

According to a survey of Canadian companies by Hewitt Associates, only 33 per cent of organizations will offer a holiday bonus this year, consistent with the 32 per cent that did so last year.

But it’s not all coal in the stockings for employees, as the majority of employers plan to host a holiday party for employees this year.

Hewitt surveyed 117 organizations across the country for its 2004 Holiday Bonuses and Gifts Survey. It found that 67 per cent of employers will not provide a holiday bonus this year. In fact, 58 per cent of organizations have never had a holiday bonus program, while nine per cent once had a program but have since discontinued this practice.

Employers cited several reasons for never having a holiday bonus or gift program, including they had never considered implementing such a program (49 per cent), cost (31 per cent), and that offering a holiday bonus would not be consistent with the organization’s reward philosophy (18 per cent.)

“These findings are consistent with Hewitt’s other research that suggests when employers have discretionary compensation dollars available, they prefer to use them for performance-based reward programs that are more closely aligned with company goals and objectives,” said Todd Mathers, a consultant at Hewitt’s Toronto office. “That’s not to say that employers aren’t showing their appreciation this holiday season — quite the opposite. The vast majority of organizations are choosing to say ‘thank you’ but in a more team-oriented and celebratory manner.”

Gift certificates popular

Of the 33 per cent that plan to offer a holiday bonus program, 45 per cent hand out gift certificates, 32 per cent provide cash bonuses and 21 per cent reward employees with some sort of food item, such as a turkey or a ham.

These organizations said they continue to award holiday bonuses as a way to show their appreciation (58 per cent), because of tradition (21 per cent) or as a form of good will (18 per cent.) More than half (53 per cent) of organizations indicated they began their holiday bonus programs after 1990, with 32 per cent of those programs beginning after 2000.

In addition, Hewitt’s survey found that 76 per cent of responding employers spend a fraction of one per cent of their payroll on holiday bonus and gift programs. The monetary value of these awards varies by type. For example, organizations providing a holiday gift or bonus program planned to spend a median of $300 per employee on cash awards, a median of $50 on gift certificates and a median of $25 on food items.

“For these organizations, the investment in their holiday gift or bonus program is less about the dollar value and more often about reinforcing the tradition, culture and values of the organization,” said Mathers. “However, the average variable pay or incentive award among Canadian employers in 2004 was 13.5 per cent. It’s clear that many companies prefer to direct most or all of their discretionary compensation dollars to motivate and reward high performers.”

Holiday parties

The corporate party continues to be the preferred method for employers to show their appreciation, with 88 per cent of employers (up from 80 per cent in 2003) hosting a holiday party this year.

A similar survey conducted by Hewitt in the United States found that 75 per cent of American employers will host a 2004 holiday function. More than two-thirds of Canadian employers (68 per cent) will cover the entire cost of the holiday party for their employees. Seventy-nine per cent will invite employees’ spouses and significant others and 59 per cent of those companies will pay that additional cost.

Children’s parties

The study also found that 69 per cent of organizations will host a children’s holiday party for their employees’ families.

Nearly three-quarters of those organizations (71 per cent) will pay 100 per cent of the party’s costs and most (85 per cent) will also provide a gift, averaging $19 per child.

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