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Giving Back

by Jennifer L. Nelson
Many workers have stuck faithfully with their employers through this recession, going two to three years without a raise. The holidays could be the perfect time to let them know how much their work is valued.

While everyone scrambles to find the perfect holiday gift for their loved ones this month, South Jersey businesses are making holiday plans for some of the most important people on their list: their employees.

After a year marked by tentative growth for many businesses, employers at both large and small companies must make financial decisions regarding end-of-year-bonuses and holiday gifts, as well as upcoming corporate holiday gatherings.

While these decisions vary greatly from company to company, there are some considerations all businesses can make to ensure that employees are feeling valued and appreciated this holiday season—and that their business starts the new year on the right foot.

“End-of-year bonuses and holiday parties are critical. Business owners have to look at the bigger picture: Happy employees tend to be more loyal and work harder,” says Mitchell L. Mullen, partner at Mullen & Reagan, LLC in Cherry Hill. “Even if you can’t offer large bonuses this year, you do want to show employees that you’re thinking of them.”

According to Lori Hourigan, regional manager for staffing firm Robert Half International’s Mount Laurel location, the economic downturn has indeed had a significant impact in the value of holiday bonuses and parties. “Employees have been working through pay cuts and without bonuses or raises for two or three years, and they haven’t been leaving their jobs,” she says. “But now, things are starting to get a little better, and for businesses who want to retain their employees, a bonus lets them know you appreciate their hard work.” Hourigan says current trends indicate roughly 30 percent of executives are planning to offer larger bonuses this year, with only 14 percent offering smaller sums of money.

Businesses also have the option of giving holiday gifts to show their appreciation, though Mullen advises employers to consider what employees value most. “We give bonuses through payroll checks as opposed to gift certificates, because in these times, that’s what people need,” he says.

However, businesses shouldn’t be opposed to offering modest end-of-year compensation in the form of restaurant or store gift certificates, or even untaxed contributions to employee IRA or 401(k) accounts, says Michael Pucciarelli, senior partner, Bartolomei Pucciarelli, LLC, a CPA firm in Lawrenceville.

“Cash is always king, but if you’re shopping for your holiday dinner with a gift card, you’re going to remember who paid for it,” Hourigan agrees.

If money is particularly tight, there are other ways to express gratitude to employees. “Offering a few extra paid vacations days, a flexible schedule, or telecommuting options is important to a lot of people,” she adds. Depending on the type of business, an employer could also offer complimentary services for employees instead of straight financial compensation, Mullen says.

For smaller enterprises, funds for end-of-year bonuses are typically allocated based upon the company’s success throughout the year, though Hourigan says that in a “normal economy,” a business might allocate holiday bonuses in their annual budget per employee. “People are still flying by the seat of their pants right now, but if this year turned out better than expected, bonuses are a good way to spend the extra money,” she says. “It goes a long way toward keeping employees happy during the holiday season … and happy to work hard next year.”

“[Our] bonus amount is directly related to how profitable we are as a company,” agrees Craig Kreismer, human resources director at Association Headquarters, Inc., Mount Laurel. “It’s important to share the wealth with employees. Without them, there would be no wealth.”

Offering holiday bonuses in lieu of salary raises gives business owners the flexibility to survive another potentially unsteady year in 2012 without looming financial commitments to employees. “We’re proponents of offering bonuses instead of raises,” Pucciarelli says. “It’s a good way for your team to know you’re giving back to them, but the company isn’t locked into additional compensation for the following year. It may just save employers from having to cut jobs if next year isn’t as successful as anticipated.”

The touchy part comes when employers sit down to write checks, and they must determine how much to award each employee in bonus compensation. After determining what’s available for bonuses and holiday parties at the end of the year, funds can then be allocated based on a percentage of salary, merit, or a combination of both—but should remain comparable for those employees holding similar positions.

“A simple percentage is the easiest calculation, but I believe a combination is best ... then you can offer extra money to those who have helped grow the business and make it profitable throughout the year,” Pucciarelli says.

Along with planning how much to allocate for bonuses and holiday gifts, employers must also make decisions about their holiday parties. Pucciarelli says this is where a business’ corporate culture really comes into play.

“It runs the gamut; some businesses host holiday parties at upscale restaurants, while others bring in lunch,” Mullen says. At Robert Half International, the recession caused a drastic change for the company’s holiday party. “We went from a Ritz-Carlton to a bowling alley … which turned out to be even more fun,” Hourigan says. Businesses can also save funds by hosting the gathering at a BYOB restaurant or a bar like Dave & Busters, or organizing the evening as a cocktail hour with finger foods rather than a lavish sit-down meal.

“Even if your cash flow isn’t what you wanted it to be this year, it’s still important to do something for your employees ... it doesn’t have to be the fanciest event, but it should be a fun way to get everyone together and outside of the cubicle,” she says.

“The value of holiday parties and gifts go beyond the actual dollar amount paid out,” concludes Bob Waller, president and COO of Association Headquarters, Inc. “It’s important that companies take as many opportunities as possible to express their appreciation to their staff for all of their hard work.”

Published (and copyrighted) in South Jersey Biz, Volume 1, Issue 11 (November, 2011).
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