Holiday Bonus Forecast Anticipates Fuller Employee Stockings

Year-end awards expected to be larger than last year

Stephen Miller, CEBS By Stephen Miller, CEBS October 26, 2016
Holiday Bonus Forecast Anticipates Fuller Employee Stockings

updated Dec. 6, 2016

As the U.S. economy continues to grow at a tepid but steady pace, three-fourths of HR and hiring managers (75 percent) are reporting that their company plans to give employees monetary holiday bonuses toward the end of this year, up from 67 percent in 2015.

This year's bonuses are also expected to be larger than the ones that were given last year, when companies planned to give employees $858, on average. This year, the average bonus amount has risen to $1,081.

The findings are from the 2016 Holiday Bonus and Hiring Survey by Accounting Principals, a staffing and recruitment firm for finance professionals. Responses were collected in September from more than 500 HR and hiring managers across a range of industries, with 300 respondents at companies with 500 or fewer employees and 200 respondents at companies with more than 500 employees.

"We're seeing salaries increase across the board, and it's great to see that HR and hiring managers are continuing to recognize the efforts of their employees through holiday bonuses," said Kim Gottschalk, senior regional vice president at Accounting Principals.

The size of the planned holiday bonus differs widely, according to respondents:

  •  $1 to $99 (13 percent of respondents).
  •  $100 to $499 (37 percent).
  •  $500 to $999 (21 percent).
  • $1,000 or more (29 percent).

While a plurality of respondents are offering bonuses in the $100 to $499 range, the 29 percent planning to give $1,000 or more are often paying much more, driving up the average bonus size to $1,081, Gottschalk noted.

Respondents who are not giving monetary bonuses this year said they:

  • Plan to give their employees other perks (according to 39 percent of respondents not giving bonuses).
  • Give bonuses at other times of the year (22 percent).
  • Had financial performance issues that prevent giving bonuses (11 percent).
  • Were concerned about the economy's still-sluggish performance (11 percent).
  • Make charitable contributions in lieu of bonuses (7 percent).

"Amid the rise in demand for qualified candidates, employers have to get creative by offering perks that go beyond salary," said Gottschalk. "While issuing holiday bonuses is an excellent way to reward employees and help attract top talent, we're also seeing employers that are offering extra paid time off during the holidays, which goes a long way in increasing morale and attracting new employees."

[SHRM members-only HR Q&A: Are there any tax issues we need to be aware of when we give employees a gift card or other small gift?]

Earning Bonuses

HR and hiring managers said that employees are more likely to receive a holiday bonus if they demonstrate the following behaviors throughout the year:

  • Staying motivated through year-end (cited by 54 percent).
  • Being positive and upbeat (45 percent).
  • Volunteering to take on additional job duties (34 percent).

The likelihood of being awarded a bonus also increases when employees:

  • Remind the company of their accomplishments (23 percent).
  • Ask the boss for a bonus directly (15 percent).

Small Business Owners Feeling Good, Rewarding Employees

More than 60 percent of small business owners will offer a holiday or year-end bonus to employees this year, according to the November 2016 SurePayroll Small Business Scorecard.

It's a spike from two years ago when the payroll firm surveyed business owners about bonuses, and only 52 percent were providing additional pay. This year, 64 percent will give a bonus. Of those, 20 percent say bonuses will be bigger than last year.

Small business owners also expressed more optimism about the economy than a year ago, with 75 percent saying they're optimistic compared to 68 percent last November. Only 29 percent said the amount they would give was negatively impacted by macroeconomic events, compared to 36 percent two years ago.

"This appears to be part of a trend we've been seeing for a while, as small business owners reported meeting and exceeding their goals financially," said SurePayroll General Manager Andy Roe. "Aside from last month when optimism was fairly low, optimism and more specifically profits have been steady. Now they're rewarding their employees accordingly." 


Bonuses and Gifts

In a survey conducted among approximately 100 HR executives in November by outplacement and executive coaching consultancy Challenger, Gray & Christmas:

  • 66 percent indicated that their companies will be awarding some type of year-end bonus/gift. That's up from 50 percent who said the same a year earlier.

  • About 40 percent give monetary awards of more than $100 that vary year-to-year and worker-to-worker, which can be based on the overall performance of the company, the performance of the individual, or some combination of the two.

  • 30 percent said there will be no year-end award of any type, down from 44 percent in 2015.

  • 15 percent of employers provide a non-monetary gift to all employees, such as a gift basket or extra vacation day. Another 11 percent plan to give employees a small monetary award of $100 or less.

As the economy continues to improve, "employers will have to rely increasingly on bonuses and other perks to hold onto valuable employees," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

"Despite the lack of six-figure Wall Street-like bonuses, most employees still appreciate the year-end bonus," he noted. "Mostly, they want to know that their hard work is recognized and appreciated. Many workers would be happy with a $50 gift certificate to a local restaurant or store. Many would probably be happy with an extra day or two of paid vacation at the end of the year."

Related SHRM Articles:

The Most Wonderful Time of the Year…to Refine Gift and Bonus Policies, SHRM Online Benefits, December 2016

Salary Budgets Expected to Rise 3% in 2017, SHRM Online Compensation, July 2016

Holiday Bonuses Shrink as Variable Pay Gets More Dollars, SHRM Online Compensation, December 2015

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