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HOLIDAY MONEY
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Get your bonus yet?
Santa isn't the only one who will be deciding who's been naughty and who's been nice this year.
December 6, 2005: 2:21 PM EST
By Grace Wong, CNNMoney.com staff writer
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NEW YORK (CNNMoney.com) - It might not be a jolly season for holiday bonuses, but some employees can still expect some cheer from their employer this year.

Holiday bonuses are becoming less of a tradition as more companies tie their award programs to performance, according to a recent survey.

About 59 percent of companies surveyed by human-resources consulting firm Hewitt Associates say they won't be handing out holiday bonuses this year. But 78 percent of organizations surveyed offer performance-based bonuses, and these can far exceed traditional holiday rewards.

"One of the biggest reasons employees benefit (from performance-based incentives) is the sheer magnitude of award size," according to Paul Shafer, a business leader at Hewitt Associates.

According to Shafer, the typical cash holiday bonus this year will be around $450. (Since the firm's survey uses the median, or midpoint value from the findings, that means an equal number of respondents will hand out more or less than $450.)

In comparison, the median annual performance-based bonus is worth just above 11 percent of an employee's annual salary. For someone making $40,000 a year, that's about $4,400 -- nearly 10 times as much as the typical cash holiday bonus of $450.

What you should know

What to expect. Employers that use what are called variable pay plans award bonuses to employees based on whether they've achieved certain targets and goals during a fiscal year.

Although plans vary by company and by role, middle and senior managers typically will see an end-of-year bonus of around 10 to 20 percent of their annual salary, according to Bill Coleman, senior vice president of compensation at Salary.com. Supervisors might earn up to 10 to 15 percent, while the awards of lower-level employees might be capped at around 5 to 10 percent.

"Those targets are generally what everyone gets in a good year -- not a bad year, not a great year -- a good year," Coleman said.

Performance matters. End-of-year bonuses are determined by company and individual performance.

Specific performance goals vary by industry. Corporate companies might set financial goals, such as a profit and revenue targets. A manufacturing plant, on the other hand, might measure performance according to output and quality of production.

Individual performance matters too, and managers will evaluate employees based on their contribution to the company throughout the year. An exceptional performance might garner an employee a larger-than-normal bonus, while poor performers could be denied any bonus.

It shouldn't be a surprise. Employees should be aware of what they need to accomplish in order to earn a performance-based bonus, according to Norine Dagliano, a career management consultant.

When it's time for the annual review, workers should be prepared to prove their value to the company. "You have to take what you've contributed to the company and put it on the table and negotiate it at an appropriate time," she said.

It's also important to keep your manager updated on how you're achieving your goals, Coleman added. "Earning your incentive is something you need to do all year round. If you wait until the last minute, you're likely to miss your opportunity to make the best case for your situation," he said.

No guarantees. Just as holiday bonuses aren't guaranteed, end-of-year awards aren't always a sure thing -- even for top performers. This can happen when the economy is experiencing a downturn, or if a company has a particularly rough year.

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