Bonuses Important to Employee Retention

ByABC News
December 6, 2001, 9:34 PM

Dec. 10 -- Ye olde holiday ham may not cut it for most workers, but when it comes to keeping employees happy, bosses may find that some form of year-end recognition beats no bonus at all.

At the same time, experts say workers counting on a holiday gift from their employers are waking up to a less satisfying reality, one where the once-traditional bonus has gone the way of corporate profits and disappeared.

"The mega-bonus era is over," declares Judy Olian, dean of the Smeal College of Business at Pennsylvania State University in University Park, Pa. "If there's less of a bottom line, there's less to distribute at year-end."

Where receiving a holiday ham, gift certificate or small sum of cash used to be a normal cultural practice in Corporate America, now what is routine are frozen salaries and job cuts. The Department of Labor reports that since the recession began last March, more than 1.2 million Americans have lost their jobs.

"Employees are expecting less this year in terms of merit-based bonuses and other pay incentives," agrees Bill Coleman, senior vice president of compensation at, a Web site that provides information on human resources and compensation. "The general population is resigned to getting next to nothing and will be pleasantly surprised to get something."

Yet, at this sensitive economic time, firms with a tradition of giving out a little holiday cheer should seriously consider to do so this year, says Alison Peterson, a senior consultant with Lincolnshire, Ill.-based Hewitt Associates, a management consulting and outsourcing company.

"If the gift is symbolic, it may be more important now than ever to show employees that their company cares about them," she conjectures. "If the expenditure isn't really big it's important to make sure those who have survived layoffs feel good about the business."

Reconsidering the Bonus

Recession or not, holiday rewards really do matter to employees, finds the latest workplace survey conducted by opinion research firm Wirthlin Worldwide, for Xylo Inc., a Web-based human resources solutions firm in Bellevue, Wash.