As the economy struggles to crawl out of the worst recession in decades, many companies remain focused on containing costs. However, one new survey shows that, despite continued worries about costs, 64 percent of employers are planning to hand out holiday bonus checks this year.
The survey of approximately 100 human resource executives conducted in November by global outplacement consultancy Challenger, Gray & Christmas, Inc. suggests that while companies are not quite ready to accelerate hiring, they are cognizant of the potential to lose high performing workers when the job market begins to improve and job creation gains momentum.
The percentage of companies awarding holiday bonuses this year represents a marked improvement over 2008, when 54 percent of companies planned to give bonuses. Not only are more employers planning to give bonuses this year, but some are planning to give bigger checks. Eight percent of those polled said their companies were increasing the size of bonus checks. Last year, none of the companies planning bonuses were giving bigger ones.
While the survey shows an overall increase in the percentage of companies awarding bonuses, it also demonstrates the impact that the recession has had on many companies. Sixteen percent of respondents said that, while they awarded bonuses in 2008, they did not plan to do so this year. That is up from 13 percent of companies that saw the cancellation of bonuses from one year to the next.
Another four percent of companies planned to give smaller bonuses than a year ago, which the same percentage who said as much in the 2008 survey.
“Companies are not quite ready to ramp up hiring, but they are beginning to see the light at the end of the tunnel. While most can probably justify postponing bonuses another year, there are growing concerns that job market improvements in 2010 could bring an exodus of workers. Companies are also sending a message that we appreciate that this has been a tough year for everyone, and that the workers’ part in ensuring continued survival is recognized,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
Many employers are indeed expecting a rapid surge in turnover when the economy improves, according to a survey by consultancy firm Deloitte. The survey found that nearly two-thirds of managers were highly or very highly concerned about losing high-potential talent in the year after the recession ended.
“In addition to layoffs, the recession forced many employers to decrease workers’ hours, institute pay cuts, force employees to take unpaid vacations and halt matching 401(k) contributions. While some of these measures have saved jobs, they undoubtedly left many workers disgruntled, frustrated and ready to move on as soon as the market improves. Year-end bonuses may not ensure the loyalty of all unhappy workers, but they could help entice some to stay aboard,” said Challenger.
Most companies are tying the size of year-end bonus checks to the performance of the company and/or individual. According to the survey, 63 percent of those awarding holiday bonuses are basing them on performance. About 19 percent are planning to keep the size of bonus checks the same as last year.
While the human resource executives surveyed did not provide details on the amount of bonus checks, John Challenger said some companies may choose to be creative when it comes to year-end rewards.
“In some respects, it truly is the thought that counts. Employees want to be recognized for their contribution to the company. It doesn’t have to be a Wall Street sized bonus check. Many workers would be happy with a $100 gift certificate to a local restaurant or store. Many would probably be happy with a couple of extra days of paid vacation at the end of the year. Many are simply happy to have a job in this economy,” said Challenger.
“Of course, those who are just happy to have a job are usually the first ones seeking greener pastures at the first sign of improvement. Companies understand this and it is why nearly two-thirds of them are finding a way to give bonuses this year,” he concluded.
Source: Challenger, Gray & Christmas
