It is that time of year. The one where you know your employees are wondering what, if anything, will be done for an end of year bonus. Employees try not to get their hopes up, but in the back of their minds they are hoping for a bonus. Whether it is being used to cover a vacation or pay off a medical expense, most employees plan how to spend the money before they have it. That said, some businesses do other things like gift cards, a big holiday dinner, or something else. Which is the best? Do employees prefer cash or something else? Here are some tips to navigate this sometimes tricky part of owning a business.
What Small Businesses Do
In 2017, Bank of America surveyed 10,000 small business owners and found that 35% give cash bonuses at the end of the year while 24% of small business owners do not give any end of year perks at all. Of the 35% that gave bonuses, 75% gave bonuses based on time with the company or sales rather than a flat amount to all employees.
The fact is small businesses do things differently from each other. If you asked other small business owners what they do you will get a wide range of answers. It all comes down to what the business can afford and the culture of the company.
In Lieu of Money
A recent trend for small businesses is to give employees extra time off with pay. This often coincides with the week between Christmas and New Years. Most schools are closed that week, and it gives employees the chance to spend time with family without digging into their vacation time. It also gives employees the opportunity to relax before coming back for the new year. Obviously this doesn’t work in some industries where the end of the year can be incredibly overwhelming and busy. It doesn’t always even work for every position in a company. In those situations, small businesses may need to avoid this offering.
Can You Afford It?
Something many businesses do is roll with the punches. They set bonuses as a percentage of profits, as an example. So a business may say 15% of our profits will be split amongst the employees. If there is no profit in a particular year, that may mean no cash bonuses. This is two fold: it keeps bonuses at a manageable amount, and it motivates employees to work to retain and attract customers.
It isn’t worth ruining your company’s finances just to give your employees a bonus. If it looks like a bonus isn’t going to be possible, let your employees know as soon as possible in the year. Many families count on bonuses for their household expenses, and they made need to make some adjustments.
Know Your Employees
In the end, knowing what your employees prefer is important. Some would rather receive a thoughtful gift than cash. Maybe a gift card to a place they have mentioned enjoying or a few extra days off to care for a sick family member. Cash isn’t the end all and be all of employee bonuses. There are other options, and sometimes employees even prefer the non-cash options. It’s okay to ask your employees what they want. This can alleviate a lot of the stress of trying to decide.
The end of the year can be hard, but bonuses don’t have to be. Surveys show this is one of the things that stresses out small business owners the most at the end of the year, but the chances are you are overthinking it. Bonuses are just that: a bonus as a thank you for hard work. It isn’t a requirement, and if your business can’t do it or you just don’t want to that is okay as well. Celebrate your employees in the way that works best for your company.
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