The Truth About Your Holiday Bonus

The Truth About Your Holiday Bonus


Sure, he had a dark night of the soul, but eventually, Scrooge came around. He gave Bob Crachit a raise and handed out a giant turkey. Meat-lovin’ Hormel Foods, which manufacturers Spam and other edibles like corned beef hash, did even better. They gave out tasty cash—$17.4 million in bonuses to its employees. It worked out to about 2.5 weeks of extra pay for the employees. Now that’s a holiday bonus.

Holiday bonuses used to be standard, but are becoming rarer in the U.S. Other countries tend to be more generous. Ireland, for example, even gives a Christmas bonus to citizens receiving social welfare assistance.

A survey by outplacement company Challenger, Gray &…wait for it…Christmas, looked at year-end bonuses. Okay, seriously, who would name an outplacement company Challenger, Gray & Christmas? No, besides Dickens? But back to the survey results. More than 40 percent of U.S. companies don’t give a year-end award, and of those that do, half give out nominal gifts or cash valued at less than $100. Bah, humbug.

“There could be several reasons for the shift away from year-end bonuses,” says John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in the report. “Certainly, the economic conditions of the last four years have contributed. In addition, some companies may have found that year-end bonuses are not the morale booster they once were and that there are more effective ways to reward high performers, while increasing the morale and loyalty of all employees. In many companies, year-round efforts may have replaced the end-of-the-year gesture.”

Some companies may have found that year-end bonuses are not the morale booster they once were...

Intriguingly, another reason for the lack of holiday bonuses is rooted in psychology. According to Psychology Today, in order for a bonus to feel significant to an employee, it needs to be about seven percent of someone’s salary. That’s a huge expense for a business. No wonder companies choose other ways for employees to feel recognized and rewarded during the holidays, such as parties or participating in a charity as a group.

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So if you don’t get a year-end bonus, don’t take it too personally. See my story on Expectation Hangovers, which has some great insights on dealing with disappointment. And sometimes, receiving nothing is better than getting a crappy token gift, like a giant Hershey’s Kiss or a company mug. However, if you are lucky enough to work for an employer that grants year-end windfalls, read on:


If you’re living in Venezuela, you hedge against inflation by trading bolivars for black-market U.S. dollars. But here are some ideas for the rest of us:

  • Pay down your credit card, student loan or car loan.
  • Make an extra payment on a mortgage.
  • Save it as a holiday shopping fund for next year, so you won’t have to use your credit cards for gifts.
  • Give a donation to a charity. Studies have shown that giving actually makes you happier and feel healthier than receiving physical gifts.
  • Treat yourself to a vacation.
  • Invest in yourself. Take a class that interests you or one that can help you advance at work.

And have a happy holiday, every last one of you!