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Just Rewards

Should you give your employees cash for Christmas?

In this season of giving, should your gift list include cash for employees? At many companies, a year-end bonus is traditional--but it may not be the wisest way to invest your compensation dollars.

Chuck Coonradt, president of The Game of Work Inc., a management training firm in Park City, Utah, likes holiday bonuses but believes they should be tied to performance. Otherwise, they become an entitlement employees expect, without enhancing your operation.

"Set up specific, measurable, attainable goals, and if those goals are achieved, then deliver the bonus," Coonradt advises.

Design your program so your bonus year ends in October, and you can deliver the award at Thanksgiving--"a `thanks for being here' kind of deal," Coonradt says--or any time before the end of the year.

Coonradt also believes holiday turkeys, gift certificates and other noncash gifts are usually a waste. "The best kind of bonus is to be close enough to your people to understand what they want," he says.

But such individualized gift-giving is time-consuming and generally feasible only in very small operations. It also poses a risk; employees may perceive an unfairness in the gift selection.

If you decide to convert to a performance-based holiday bonus, however, don't do it this year. "Give them whatever they are expecting in 1996, then tell them you are putting in a new plan for the coming year and what it will consist of," Coonradt says. You'll avoid disappointment or anger this year, and employees can start 1997 with their performance energized by the chance for the new bonus.

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This article was originally published in the December 1996 print edition of Entrepreneur with the headline: Just Rewards.

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