Is the Christmas bonus still a good idea?

Photo by CC user Glenn Waters on Flickr.

The concept of the Christmas bonus is hanging on by a thread. Suffering from the effects of the financial downturn, many businesses have looked for the best ways to save money and one of those is doing away with a bonus over the Christmas period.

For many, the Christmas bonus is a welcome reward at a very expensive time of the year and losing it is a big deal. However, some people don’t see the Christmas bonus as something that’s worth having anyway.

Let’s have a look at whether we should be fighting to keep it or if it’s not really worth worrying about.

The benefits of the Christmas bonus

Having a bonus at Christmas is seen by many employees as a very welcome part of their job. Christmas is an expensive time of year so it can be very helpful to have a bonus on top of your wages to help pay for it. It also functions as the employer’s ‘thank you’ to their staff for their hard work throughout the year.

It’s also worth noting that the period leading up to Christmas is often one of the busiest for a company and one of the most vital times to be successful. With staff under pressure and having to work very hard every day, the thought of an eventual Christmas bonus can be a way to keep morale high through this time.

But a problem can arise in the sense that a Christmas bonus just becomes an expected part of the salary. To stop this from happening some companies link their Christmas bonuses either to employee performance or overall company performance.

Employee performance-related bonus                     

A popular way of giving out a Christmas bonus is to link it to performance. Instead of giving an arbitrary bonus around Christmas time you can ensure that members of staff give their all over this crucial period by giving them a bonus in line with their performance.

One problem that may appear if you give a performance-related bonus only once a year is that it can leave people feeling hard done by. It’s naturally more likely that those putting in excellent performance at work later in the year and going to be recognised by those making the decisions. But if one employee, who may have been doing stellar work early in the year, is on a long holiday later in the year, they may find themselves harshly judged.

It could be the case that if an employee sees another who they feel does not work as hard as them getting a larger bonus, it could actually have a negative effect in terms of motivation. That’s why it is essential that the process of establishing performance-related bonuses is entirely fair and transparent.

Company performance-related bonus

Another idea that some companies use is to link the bonuses to the performance of the company as a whole. When the company is able to make a profit, employees are rewarded with a bonus to recognise that they are a big part of the success. Of course that also means that if the company struggles it means there will be no bonus.

An advantage of this method is that it encourages employees to work as a team for a shared goal that benefits the company. This is better than the selfish need to work hard for yourself to get a bigger bonus.

Of course the natural downside of this approach is that an employee can see all of their hard work come to nothing through no fault of their own. This can actually lead to a lowering of morale if an employee does everything they can but receive no bonus. Equally if employees are aware of a bad financial situation that the company might be in they can realise quite early on that they are unlikely to receive a bonus. Again, this can demotivate them rather than provide them with an incentive.

Are there better alternatives?

There are plenty of other options that might be a better idea than a Christmas bonus. If you are looking to incentivise harder work from staff it’s a better idea to provide a more regular bonus. Instead of leaving the Christmas bonus as this one-off unusual event that may or may not happen, a regular bonus shows staff that if they work hard they will be rewarded.


Mike James is an experienced writer focused mainly in the business and marketing fields, partnering with Planday on a series of online publications.