Thinking About Employee Holiday Gifts? Consider These Compensation, Benefits Ideas

The 2023 holiday season is upon us, bringing with it the perennial question of: "What, if anything, should we be doing for employees this year?"

Extra benefits and compensation for the holidays, in particular, can have a significant impact on employee engagement and morale - positively if done well, not so positively if these efforts miss the mark.

"The holidays are a stressful time for many employees, both financially and emotionally," said Amy Letke, SHRM - SCP, national HR consulting practice leader at New York City-based professional services firm Marsh McLennan Agency. "Showing support with compensation and benefits-such as bonuses, extra paid time off [PTO], employee assistance programs [EAPs] or even babysitting services - during this time is particularly important."

Eric Cormier, manager of HR services with Insperity, an HR services firm headquartered in Kingwood, Texas, said recognition during the holidays is an important part of company culture.

"Employees certainly have diverse family traditions, but many Americans come together in November, December and January to celebrate, show appreciation and give gifts," he said. "Consciously or not, many employees see the holidays as a time when [employers] show they care."

Here we take a look at what employers are doing to recognize and reward employees during the holidays.

Bonuses and Financial Support

Bonuses are common at the end of the year for many organizations, especially given that they are highly valued by employees, Cormier said. They are, he said, "a longstanding tradition to boost employee morale and remain a trend in 2023."

Letke agreed, noting that "year-end bonuses at the holiday time are coming on strong for companies where business has performed well."

But while extra income is always a welcome benefit, once implemented, employees may come to expect these bonuses, even spending the money before it's received - a tough lesson that Clark Griswold learned in "National Lampoon's Christmas Vacation."

Lori Wisper, managing director at consulting firm WTW, said she believes that some companies are moving away from holiday bonuses. 

The strength of the economy, of course, plays into corporate decisions about end-of-year bonuses, Cormier pointed out.

"In 2022, some employers chose to forgo holiday bonuses out of concerns about a recession," he said. This year, if organizations choose to discontinue or reduce their holiday bonus program, he suggested that company leaders explain the financial reasoning behind the decision to employees. In addition, he said, it is "especially important for organizations forgoing holiday bonuses to show appreciation for employees in other ways, like personalized thank-you notes and team-building activities."

Monica Martin, senior director of integrated and global solutions and total rewards leader with WTW, agreed that while holiday bonuses are not as widespread as they once were, "there's a recognition that it's been a tough year financially for employees because of inflation and rising interest rates."

As a result, Martin said, employers are thinking about different kinds of financial support they might be able to offer during the holidays, such as access to financial advisors or education on better spending habits during the holiday season.

"It may not be so much new programs, but it's about, 'How do we activate what we already have and make sure employees know that they have it - know that they have access to it and how to use it well?' " she said.

Company Parties

After being totally eliminated during the COVID-19 pandemic in 2020 and taking a hiatus for some companies for a few years, the holiday party is back and "returning in full force," Cormier said.

"Employers know holiday parties are a way to boost their team's morale and promote bonding," he said. "Some employers also announce annual promotions or otherwise recognize top performers at holiday parties, which can incentivize employees to work hard throughout the year."

However, industry experts have said companies should not make these social activities mandatory, as such mandates can backfire and can even lead to wage and hour issues for employers.

In addition, as employees seek better work/life balance - or worry about catching illnesses such as COVID-19 or the flu - requiring them to mix social activities with what feels like work really doesn't offer great benefit.

Extra Paid Time Off

At any point in the year, but especially during the holiday season, employees will appreciate the gift of time.

Sequoia Consulting Group, an HR consulting and services company based in San Francisco, said it's seeing more companies give employees the week between Christmas and New Year's Day off, said Kyle Holm, Sequoia's vice president of compensation advisory. It's a practical move because they see most employees take that time off anyway, he said. The smaller the company, the more likely it is to give this time off, according to Sequoia's research (24 percent of all firms versus 35 percent of smaller firms).

Not all companies can do this, but those that can "will typically see employees return from the holidays feeling grateful, refreshed and willing to work," Cormier said.

In addition, he said, not requiring employees to use PTO during this holiday shutdown lets them "enter the new year with more vacation time, which can improve their work/life balance throughout the year."

Companies can also consider offering time off during other seasons. "One of our clients decided to close the entire week of Thanksgiving, providing paid time off to all employees, to give their team time with family," Letke said. "The employees are thrilled, to say the least."

Child Care Benefits and Work/Life Balance

Spending time with family is an important part of the holidays, but caring for children can sometimes conflict with planning, prepping and just relaxing for many employees. Companies may be recognizing this.

According to Sequoia Consulting Group, another employee benefits trend for the holidays is increased use of child care benefits in December. Some employers are being proactive in adding more dollars for child care reimbursement or simply reminding employees that the benefit exists.

Shannon Arens, Sequoia's well-being consulting manager, has noted a trend of seeing greater utilization of child care benefits in December. The intention, she said, is that "employees can take advantage of these benefits while their kids are out of school for winter break."

How about overall work/life balance? Deloitte, a New York City-based audit, consulting, tax and advisory services firm, is being proactive in helping employees maintain well-being during the holidays.

Heading into Deloitte's companywide time off during the holidays, said Amy Smith, managing director and U.S. firm well-being leader, the company is kicking off its annual Well-Being Week.

Employees "will have the opportunity to hear from keynote speakers; participate in team discussions; take workshops on thriving mentally, physically and financially; and craft a personal well-being pledge to share on LinkedIn," she said.

Make It Meaningful

Special benefits and compensation offerings during the holidays can have a positive impact on employee morale and engagement, but it's important for these offerings to be well thought out and aligned with employees' needs and interests.

"Cheesy gimmicks aren't going to win favor," Letke warned. "Handing out something that doesn't resonate with employees is a waste of money - this could be food, gadgets that don't fit the demographic or prizes that aren't personal."

Letke stressed the importance of asking employees what matters most to them. "When employees feel heard and they have a stake in incentives, perks, holidays, PTO and overall benefits, employers can create wins for both employees and the organization itself."

PwC, which does a companywide shutdown in December (and in July), uses "tech-enabled vacation tools" to make it easier for employees to schedule time off and for the company to solicit their feedback. Overwhelmingly, the companywide holiday breaks have been a big boon to the organization, said Kim Jones, PwC people experience leader.

After the July shutdown, 93 percent of employees said their time off was uninterrupted and protected, in the sense that they didn't feel pressure to work during the break. "We know the value of protected time, and when we take time off together, we can support each other to fully unplug and recharge," Jones said.

Martin's advice to employers: If you're going to do something, make sure that it's something employees understand and will actually value.

"[Make sure] that you're properly promoting the programs and tying into your strategy so it doesn't just look like it was plucked out of thin air." 

Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.