I think if no warning has been given that the holiday bonus will be based on performance, then the bonuses should be divided up the same way they have been in years past. If you want to make them based on performance, you should at least give the employees a few months of notice.

Definitely! No need to expand on this.

I agree with the first post. In order to base a bonus on performance (particularly one that in the past has been handed out more as a "gift") a manager should inform the staff in advance and set clearly defined expectations. Then when you discuss with them how you divided up the bonus you can review the expectations you set and to what degree they achieved them.

Bonuses should always he granted according to performance. Supervisors who do not warn employess that slack risk litigation if they terminate them. Everyone should always know where they stand; high performers want to know and will welcome the feedback on how to be better. Low performers will be uncomfortable and will move on to a workplace that allows them to slack.

I would agree with Brian from Texas. Unless otherwise noted/indicated to the employees, holiday bonuses are not tied to performance.

Grant the bonuses on performance. When an employee hires into a company and accepts pay from that company it is in exchange for them performing up to task. No special invite to the party should be given. In today's society there is a general move to coddle and not identify weak performers for fear of hurting someone's feelings and we need to get over this. If you don't like it then either work better or move out.

I was faced with a similiar situation and I would have to agree with what a few folks previously said. You need to give advance notice, so maybe give the same this year with the notice that next year will be based on performance.

A perfect opportunity. Why shy away from an opportunity that could create "change". Change is good if you enable and mange it. Change happens even if inhibited. Reward the performers and let the others get the message. Coach them all and change will look after itself. Mangers must strive for growth in people, economics and ultimately success. Life is like that. Bonuses are one form of praise to be used wisely to affect change, not status quo.

There is a huge difference between a "Holiday bonus" which I firmly believe everyone should recieve the same amount and a "year end bonus" Employers have the right to pay employees based on thier year end performance. If someone isn't doing the job they were hired to do from the start, why on earth would you give them a year end bonus??

In most companies I've worked at, the amount of the bonus is directly tied to how well the last annual appraisal was for the individual. The better your last review, the bigger your next bonus. One caveat I had at one company - a person must achieve at minimum a 'meets expectations' or 'satisfactory' rating in every category on the annual review or there is no bonus regardless of the overall appraisal rating.

Let's face it. Pay and expectations are handled at review time (and periodically throughout the year). We are talking about a "Holiday" bonus here. And what Holiday is it? Christmas! 99% of us are celebrating the birth of Jesus. Give equally to all and enjoy the spirit of the season.

as an employee who works hard and tries to give more than asked...I feel the year-end bonus should be tied to performance! I am tired of everyone "getting the same"!!! (*just because the boss is a wimp) and since it makes no difference what I do..time for me look for another job. Which is the thier loss

Employee's know when their work isn't up to the other peolpe in the office. They don't need to be told or "coached" If they are not producing as the others are, let them quit. Their bonus' should not be as much as the ones that are bustings their butts.

If I give everyone the same amount, the good workers are upset. If I give merit based bonuses, the poor performers are upset. I'd rather have my worst workers mad at me than my best, so I go with the merit based approach

There are two types of bonus: Company Performance Based and Individual Performance Based. The answer depends on which type of bonus money this is.

As the manager, you can reward your top performers at raise time by giving them a better raise, a promotion, new responsibilities, etc.

Don't use the company's performance bonus as a carrot. If the company did well, share that profit equally with those who helped make it happen. Correct work performance inadequacies by MANAGING your employees (talk to the slacker!), not by blindsiding them with a new bonus policy.

My message to managers is that your employees should get what they deserve. This is a bonus, which is a priveledge, not a right. My message to employees is that you should manage your money in such a way that you are not counting on that bonus money--i.e. don't spend it before you actually know how much of a bonus you're getting.

I do not understand the attitude that a company should give out free money. Performance should be tied to any bonus an employee may receive. The one thing that this will do is force the underachievers to look at their work effort and either improve or move on to another company. If they move on, and you are able to replace them with better workers, you will do fine.

The flip side is you have to understand why your underachievers are not performing up to par. Find out things like if they actually want to work at another part of the company, or if they had �issues� with the previous boss. You never know what �gems� you might find with an underachiever. One of my greatest successes was taking an underachiever and turning her into a �star.�

How did I do it? By finding out she needed flexible working hours and provided her with more responsibilities. Upper management could not believe it. She went from almost fired, to a great asset. The other stars also loved it since it provided them with new competition and they worked hard to meet new standards.

Management is complex. Not a one size fits all.

If there is a slacker in the group, then why the dilemma? Why only address this when there is a potential payout? It should have been addressed already. There is nothing more demoralizing than "equal payout for disequal work". I agree with Stephen from VA, too much is given to prop up mediocrity. Don't go for another month making the same mistake, be a better manager. Besides, Jack Welch fired the bottom 10% of his managers every year, he didn't give them bonuses and say "see you next year". In my opinion your top performers will respond favorably. Annie- If possible, let us know what happens.

You forgot to mention research which shows that performance bonuses/pay often are based on how the manager feels about(how much he or she likes/is friends with) the person and less on true objective performance. Set the bonus criteria before hand so everyone is judged fairly and preferrably knows what is expected. Also if a manager has observed an employee slacking off... THEN DEAL WITH IT SOONER than bonus time.. It's called good management and maybe the profits would have been better. :)

I would call a group meeting,give everyone the same amount this time, and explain that future year-end bonuses will be performance-based...no more "entitlement". I would also meet subsequently with each individual and lay out clearly defined expectations for 2007 so that awards are given based on objective evaluations of performance.

In my company (Fortune 100), no manager wants the bad press of giving a bad review, so contrary to Annie's advice, there never comes a time when the manager "has to be honest" with the employee. They simply ignore the problem knowing a re-org will solve it eventually and they'll move along with a clean rap sheet. Its a pitiful situation, but rampant in big corps, especially where political correctness abounds. Thoughts?

The definition of Bonus in the Webster's Dictionary simply says extra, unexpected payment or gift. To me this simply means a bonus is a gift and it should not be questioned. If you are a receiver of a gift that is less than a coworker and you want to know why, look in the mirror, fix the problem and your gift next year should be equal or better than your coworkers. If all else feels pass out turkeys!

My personal feel is that there's a deeper psychological issue to this whole thing. I've worked in a few different places, and I've known people who were excited to get away with showing up for only 3/4 of their 40 hour work week and getting paid for it. Getting or not getting a bonus isn't going to affect someone like that too much.

On the other hand, I've worked with people who are only interested in the monetary value. They'll work just as hard as they need to in order to get the maximum raise and bonus. Sure, you can get more out of them with a bigger bonus, but only so much.

The third kind of person is the employee who's really passionate about their job. They work hard because they have pride in themselves and their work, and they do not want to turn in anything less than their best. For this group of people, a bonus is a great way to reward their hard work and dedication, but some of the non-monetary compensations can be more rewarding. Recognition of efforts, recommendations to superiors, promotions, raises, and other benefits are going to fuel them more than just money. And it's worth the effort to keep these people in your organization.

As for people leaving in protest over bonuses, I think the key is to explain what's happening with the bonus prior to the checks going out. And then set some expectations for the coming year. Let them know what they can do to get the bigger bonus next year, what skills they can add, what they need to work on, and importantly, what they're doing really well with. Make a written list of objectives and goals for everyone for the year, so they know what they need to do to be on the �big bonus� list for the year. If you�re still really worried about losing people, make sure you�ve got the position nailed down, and are prepared to list it and bring someone new in. Identify some good candidates within the company if any exist, but be prepared to have to fill that position in a hurry if they really do leave.

One other key is explaining exactly how bonuses work. A lot of people view them as a "given" or an expected part of their compensation. The real value of a bonus is to get everyone in the company looking at ways to improve the profitability of the entire organization, at least in a setup that allows for a bigger bonus if the company does better for the year. The better the company does, the better everyone's bonus is. It's something important to communicate to staff, and then to follow up with an open door and a ready ear to hear ideas that just might make things better for everyone.

I'm sure there are a thousand more things I could write, but like your boss said, "Welcome to Management."

I think the performance review is the forum to discuss expectations in terms of increases. If it hasn't been discussed at that point, then the bonuses should be split up equally.

If you haven't discussed with your employee any performance issues at this point, then thats bad Management.

I was on the other end of your situation for years. It demotivated me every year round bonus time, but that did not prevent me from excelling the rest of the year. Employees who feel that a certain level of bonuses are entitlements often become complacent. Personally I think you need to reward the hard workers, and point out to the slackers that complacency will be reflected on their overall compensation

How about giving the employees steps for improvement instead of paying them less and less until they quit. I know it's the easier solution but they may have more to offer if given the opportunity.

It's a HOLIDAY bonus, not a performance bonus. It's a gift, some holiday cheer to help people with their Christmas expenses. Same thing as giving out turkeys at Thanksgiving. Does the poor performer get a smaller turkey? A holiday bonus should be the same amount for everyone in the company. Otherwise, call it a year-end bonus and adjust accordingly.

While I think your better performers should get a bigger part of the bonus pool, I would hope that as a manager you have been actively providing feedback instead of waiting until bonus time to do so. If not, then you my friend are the slacker.

All this worry about year-end bonuses. Where I work, all employees get a $100 Holiday bonus -- before taxes.

The year-end performance bonus is you get to have a job next year, and maybe even an across-the-board, just-below-cost-of-living raise.

Quit whining. You're lucky to have a bonus to distribute.

It is pretty simple. The best workers make the most money. If someone gets mad at the bonus situation then they either need to work harder or move on. Once you weed through the slackers you are only left with the good workers. Therefore production and numbers should go up.

A bounes is not an entitlement. In a pay for performance environment you must earn your way. More performance should equal more pay. When looking at total compensation incent the higher performers to stay and incent the low performers/slacker to leave.

I manage a staff of ten and have faced the same problem.
Bonuses should not be a surprise measure of your employee's performance; they should know ahead of time what to expect. Reviews, annually or more frequently, should tell the employee how they are performing; not getting stiffed unexpectedly at bonus time.
Our bonuses are a percentage of our base salary so if you do well and get a raise at review time your bonus increases proportionally. If you do poorly and get no raise or a COLA adjustment you can expect your bonus to do the same.
As for wimpy managers wanting to control turnover; who usually picks up the slack while finding replacements? The managers or the forty-hour work week staff? Take into consideration the cost of hiring and retraining too. If it gets me home sooner I would bite the bullet and spread the bonus around.

Split the bonus by performance. This isn't a charity. If the slacker doesnt like it, he can improve or leave. Both good outcomes, I would think.

My co. had always given bonuses based on your salary, which is supposed to be based on performance. But, in the corporate world, we all know how that is manipulated by most mgrs. to boost their buddies who generally are underperformers and not a threat to that mgr.

I somewhat am somewhere in the middle of all of these comments as well as Annie's actual answer.

First, I would like to commend the person asking the question because it shows that she cares. Going into management is a hard thing and often brings tons of anxiety - I wish him/her the best.

Because no guidance had been set for the workers expectations, I think you can skew the bonuses a little this year. I do not think that you're in the position to "screw" a particular employee for being a slacker unless there is a wider corporate initiative to do so. Many companies these days, are adopting a bell curve approach whereas the bottom x% get NOTHING. Personally, I think this is the right way to go - but not without warning. Sure, there are exceptions to this. But fundamentally, I think it is right.

Let's also remember it is called a BONUS for a reason. Some call it performance incentive. But let's face it... you get paid a salary to do your job. You are NOT guarenteed a bonus - nor should you be.

Cheers...

No! The slackers should definitley get more.

I think most people missed the point. The original question was about year end bonuses not holiday bonuses. That being said it would have to be performance based.

Where I work, we never get a bonus or any recognition of a job well done. The people who do nothing get their pay check twice a month as do the people who work the hardest. Somehow that just doesn't seem fair.

I am a partner in a small communications firm, and this is precisely the type of problem that can occur in small companies or small departments. One of the notions that I have found critical to address is that "bonuses" are discretionary augmentations to the salary of each employee. Once they become an expected part of the employment package, then they cease to be bonuses.

If bonuses are performance-based, then it is vital to provide the context within which the performance (on which the bonus is based) has been evaluated. If there is a long-standing tradition or practice in place that is contradictory to a performance basis, then the new method of bonus allotment should definitely be announced and made as clear as possible as far in advance as possible. Otherwise, it can easily be seen as unfairly changing the rules at the eleventh hour.

Ultimately, if the provision of bonuses creates problems rather than engenders goodwill, then it may even be necessary to consider abandoning the practice. If nothing else, explicitly considering such a drastic step can be a way of sending the message that a sense of entitlement may be unrealistic.

You haven't even addressed bonuses for Public Service. I work for the Federal Aviation Administration. As a Govt. Agency I would rate any type of bonus or award for dedicated career employees a joke. Managers fail miserably when dealing with slackers. Meanwhile, the Senior Executives reap thousands in bonuses. Equitable? Probably not, but it is real. It is commonly referred to as the "quota" system.

Divide it up equally if you want. You won't have this problem next year because your top performers will be working for me.

This is very simple. If you do not base bonuses on performance, your top performers will leave and your bottom performers will stay.

The bonus should reflect their work performance. It is not good for morale and I believe that the employees should know ahead of time that the bonus is a reflection of their work ethics. Everyone should not receive the same amount and if somebody gets upset, so be it. Like the article reads, if they quit what is the loss to the company -- nothing but gain.

In my small professional business, year end/Christmas bonuses have always been fairly generous but NEVER EQUAL - even though every employee is excellent. I use the analogy of a dog sled team pulling a sled for a year. Christmas bonuses are based on the profitability of the business, how well the employee helped me pull the sled, and the number of hours that the employee helped me pull the sled during the year. Each employee works a different number of hours during a work year. Employees who have taken the most vacation time and/or sick leave get a smaller piece of the year end pie because someone else pulled the sled in their place.

I can't believe a management person can't know the difference from a holiday bonus and a performance bonus. NO wonder companies have such an easy time outsourcing your jobs. THe intellegent levels here speak for themselves. By the way in Mexico we know what a holiday bonus is. For all you who don't look it up on the internet. type "holiday Bonus". Boy I glad I outsourced my company to Mexico.

Bonuses--yes, everyone should get them and the same amount for everyone. While I agree with, its a chance for a one on one to talk about employee verses company but feedback on that should be constantant. Everyone contrubutes to the company. If you have a slacker-and everyone does, maybe they shouldn't be there in the first place. If they are that much of one to be noticed at bonuses time you have other issues to address with them or yourself maybe. If you have a good constant feedback system in place you should know why they are considered slackers, theres many reasons for slacking that I will not go into in depth one is employee/management relationship.
Reason Two; CEO's of todays companies get their very large bonuses-severance-(pay) if there companies do good or bad or even fail. Millions paid to CEO's every year. I use bonuses as true positive feedback for everyone the bonuses you give your employees probly arn't that great anyway-throw them a bone--sleep better. These are the people who without your job would not exist....Employees are judged way to many times throughout the year already give good consistant feedback daily or per job.

I think bonuses should be tied to performance. It shouldn't matter if you were warned or not, you should always do your best job performance regardless.

Another reason why "year end" bonuses should be done at the beginning of the calendar year. So they aren't seen as "holiday gifts" or a "christmas bonus". They should be based on performance. This year, I agree, you should probably keep them equal, but maybe next year, not only base them on objective criteria, but hold off till AFTER the holidays.

To Harold from Colorado on the previous post: I'm not sure which is worse: the content of your words and ideas or your pathetic spelling and grammar.

Many of the previous posts have it right: bonuses should be earned. I like the dog sled analogy as it applies to our company every year.

Each year we have some employees who go above and beyond with their effort. They take personal pride in their work and their relationships with co-workers, customers and vendors.

We have others that do an adequate job. They are not slackers but they do do just enough to get by. Their work needs constant attention and evaluation, they bring personal baggage to work at times, and they don't strive to achieve better working relationships with others.

Why would you EVER bonus these people the same way?

Why only worry about alienating the slackers with an un-equal bonus? Shouldn't Scrooge worry more about alienating the high performers with the equal bonus? A star employee might feel taken for granted if their hard work for the year nets the same reward as a slacker.

Bonuses should be treated as incentives - Not a holiday handout. If people are looking for a holiday handout, then give them a $20 gift card for local gas station chain.

If a company has an incentive plan that is documented, and which the employees know they're participating in, then they should be paid according to the terms of this incentive plan.

If there are no terms for incentive plans (the employees meerely use a basis of receiving holiday bonuses in previous years), and there is no company policy from higher managers to split the money evenly among groups of workers, then it is entirely up to the manager to decide how much to give each employee.

IMHO, it is a weak "company" that has no terms for it's incentive plan, and a weak "manager" who (given the choice of being a capitalist or a communist) decides to split the money equally among the employees.

I've worked for a company who switched from giving hefty holiday bonus checks not tied to personal performance (and with no terms given up front) to merely giving a coupon for a free turkey at a local grocery chain. People grumbled (top-level executives always get bonuses, while most employees are lucky to get a holiday bonus), but didn't leave their jobs. I believe the current policy at the company is that there is no bonus(again, unless you're top-level and have the written terms of an incentive plan). I think this is a smarter decision. People aren't hoping or bonus checks anymore, which can be distracting at the end of the year - not a motivation to get more work done.

And I've worked for a company that gave many salaried employees (all the way down to people fresh out of college) an incentive plan as part of their compensation (included in offers of employment, etc.). Their were years no one got any money, but everyone knew the company was not meeting it's expected numbers for the year. This year, the company did great, and it was a 15% (of annual salary) bonus check for me. I'm obviously fired up about achieving results for the company. When I started with the company, my potential bonus % was lower, but over the years of getting promotions, the % creeped up - As it should for top performers who are results-oriented and show continuous motivation all year.

Bonuses in my company seem to be based on longevity, though that's not clear. Regardless, the person who does the least amount of work gets the highest pay and bonus. Good for morale? I'm looking for another job...

Unfortunately, I haven't read everyone's post. Here's my take on it: Companies play politics. By giving bonuses to "higher performers", the lower performers may not be meeting the expectations because they don't fit well with the manager, or the people in the group don't treat these people as equals and thus, the motivation to perform for some is less. I say 'peanut butter' the bonuses, and, if you have lower performers because they aren't fitting in the group well, its a problem with management and politics, and not the individual.
If they are truly slackers, such as the people who punch in and punch out according to a clock and not on deadlines, then you should be clear upfront that they are important to the group, but there are people who are "sacrificing" and may get higher bonuses because its only fair.

This is a gray matter question for some-maybe not to every reader/blogger.

Kiss up or no BONUS!!!

I am a very hard worker and very loyal. However, I have been labeled an inferior employee due to attendance issues rising from my disabilities. Therefor, I have not received bonuses for over a year. I have applied for ADA accommodations upon starting at this company so they were aware of potential attendance issues prior to my hiring. Should I be punished financially because my new managers do not want to honor the commitment the company made to me upon hiring an employee with a known disability. Many of the problems labelled as being a slacker have been due to being purposely ignored by management for over 2 years even though I tried to bring my low work load to their attention (multiple levels of management).

A bonus by definition is EXTRA pay, and I feel should be treated as such. 'Slackers' should get smaller bonuses than hard workers.

That said, the word slacker must be defined and in context of the work place (such as the disability issue mentioned above). However as a manager you know which team members are trying and which are truly slacking, and unless you differentiate the two, morale from your cream of the crop will suffer.

It should be clear to all employees that year-end bonuses are performance based and fitting top performers should get a bigger check. However at my company, peer reviews play a big part in determining your bonus. Personally I am not a fan of peer reviews as it opens the doors to unfair or "foul play." You may be a hot shot performer but if a couple of your coworkers for whatever reason( dislike, jealousy or just flat out evil!), can screw your with your performance reviews thus reducing the amount bonus award!