Do’s and Don’ts of Holiday Bonuses

By Nonprofit HR
In November 14, 2014

By Stephanie Spivack, PHR

Remember that classic movie scene from National Lampoon’s Christmas Vacation? Clark Griswold has been eagerly anticipating a generous holiday bonus from his boss all year long. (After all, he received a holiday bonus for the past seventeen years!) When the envelope arrives, the entire family gathers in excitement, only to find out……drumroll please….he is receiving membership to the Jelly of the Month club instead. After several quickly consumed glasses of eggnog and an angry rant not suitable for children…let’s just say things go quickly downhill from there.

With the holiday season approaching, we’ve put together some Do’s and Don’ts for holiday bonuses to prevent your employees from feeling like Clark Griswold.

DO set expectations!

Employees will generally base their holiday bonus expectations on practice from past years. If nothing is possible this year due to budget constraints, be up front with staff early on. If your organization is having a financially strong year, be careful not to set bonuses too high, which can backfire with wild expectations in the future.

DON’T confuse holiday bonuses with year-end bonuses.

Year-end bonuses are typically designed to reward individual performance over the past twelve months. Holiday Bonuses are usually intended as an extra, unexpected surprise.

DO accompany the bonus with a sincere, handwritten note of appreciation.

Such a gesture is often appreciated more than any dollar amount, and costs nothing but a little time.

DON’T forget to include everyone!

It is appropriate to give everyone a holiday bonus, including the new guy you just hired last week.

DO offer something tangible.

A paper check, plastic gift card, or basket of goodies can have more of an impact than a direct deposit of equivalent value.

DON’T forget to tax bonuses.

Unless the bonus qualifies as a de minimus fringe benefit per the IRS, the amount must be added to each employee’s W-2 as taxable income.

DO ask the “Grandparents test”.

Ask yourself, “Would my grandparents approve of my approach to giving holiday bonuses this year”?

DO consider holiday bonus alternatives.

Extra paid time off, gift certificates to favorite restaurants, or a holiday lunch party are some ideas that may fit for your workplace culture. We recommend giving universal gifts that can be enjoyed by everyone, so refrain from giving alcohol, or other items that may be problematic.

And please….steer clear of the Jelly of the Month club.

Leave A Comment