Just Rewards

Should you give your employees cash for Christmas?
Magazine Contributor
10 min read

This story appears in the December 1996 issue of Business Start-Ups magazine. Subscribe »

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.

No Offense

If you think increasing concerns about cultural sensitivity and political correctness are making it harder to deal with the holidays, you're not alone. But you don't have to take a "bah, humbug" attitude; with a little thought and planning, you can enjoy the holidays without offending anyone.

Begin with an awareness of the diversity of cultures in your area, advises event planner Beth Shubert, owner of Evention Inc. in Glen Rock, New Jersey. If you're going to decorate your office with symbols that represent one religious holiday, balance them with symbols of others. For example, a nativity scene is OK as long as you have a menorah, too. You might also want to include the African motifs associated with Kwanzaa, the African-American holiday.

You may opt for a seasonal rather than holiday approach. "Try to use things that evoke the spirit of the season rather than a specific holiday," Shubert says. "Maybe a winter wonderland theme, or use candles, snowflakes, stars, and even holly and poinsettias in your decor."

"Happy holidays" and "Season's greetings" are the traditional greeting card language, but Shubert is bored by what has become the standard year-end message. Try a card celebrating the new year instead. Says Shubert, "It has a sense of beginning rather than ending."

Getting Carded

Two key issues for any business--maintaining a competitive edge and managing accounts receivable--can be addressed by establishing your own private-label credit card.

That was the answer for PIP Printing, whose PIP Business Resource Card can be used only at PIP locations. Senton Markevich, PIP's vice president of finance, says the card delivers valuable convenience to customers, and the store benefits, too: PIP gets the money within three to five days of the sale and doesn't have to deal with invoicing and collecting.

Private-label cards operate much like general credit cards such as Visa and MasterCard. The card company is a financial institution, which issues the card under whatever "label" their customers choose, then handles all the processing. When a transaction occurs, details are sent to the card company, which transfers the funds (minus a service fee ranging from 2 percent to 10 percent) to the merchant's account. The card company also handles billing and collections. "It's a great vehicle for managing receivables," Markevich says.

If you think your business could benefit from your own credit card, ask the banker who handles your credit card merchant processing for advice on how to proceed.

Just A Suggestion

Are your employees sharing their ideas for improving your products, services or the overall business? Don't assume that being a small, entrepreneurial company automatically makes you an innovative company, cautions John Gear, a principal with Catalyst Consulting Services in Vancouver, Washington.

"If you want people to give you ideas and help you innovate, you have to ask for those things, and you have to create conditions where people want to give you ideas," Gear says.

Forget about the old suggestion box on the wall. Gear offers these tips for creating an effective suggestion program:

  • Allow suggestions to be submitted by anyone, on any subject, in any medium, at any time. Provide forms to people who want to use them, but don't reject ideas submitted in other ways. "The first step in distancing yourself from ideas is requiring people to package them in a certain way," Gear says.

  • The owner or senior managers should review the suggestions first, before anyone else does. Schedule time at least once a month for this.

  • When you first look at a suggestion, consider the possible results with no regard for feasibility. Ideas that seem to have no positive potential can be rejected without further investment.

  • Ideas with the potential for good results should be studied for feasibility. The person charged with this task should also be prepared to implement the idea and measure the results, or put together a report explaining why the idea isn't feasible.

  • Acknowledge every idea, and keep the contributor informed of its status.

  • Make it clear that you welcome ideas that might not work and that you don't require employees to consider implementation issues before they make suggestions.

  • Reward those who make successful suggestions both financially (a generous share of the resulting savings or increased profits is good, Gear believes) and with verbal recognition.

If you have a specific problem you'd like input on, consider scheduling a problem-solving session that's open to everyone. Gear suggests announcing that you'll be addressing a particular issue at a specific time and place, and anyone who might have input is welcome to attend.

Finally, Gear says, give your suggestion program time to work. "Your people have probably been conditioned all their lives to not make suggestions," he explains, "so it may take a while to see results."

To Tell The Truth

When you have trouble paying your bills, you probably feel your hands are already full dealing with creditors--but don't overlook the need to communicate with your customers.

"If you're having cash problems to the point that it's generating rumors, your customers will find out--and may take their business elsewhere," says Jennifer Magee, CEO of Keating Magee Long Advertising, a New Orleans advertising and public relations firm specializing in crisis management. "In general, people are more sympathetic if you are open and upfront with them."

If you suspect your financial situation is a topic of gossip, act fast. Magee recommends you or a senior manager communicate with each customer's key decision maker--ideally, by visiting in person. If that's impossible, the next best option is a phone call. If you send a letter, realize you lose control over who sees it after it leaves your office, and it could be floating around long after your financial troubles are over.

Whatever method you use, acknowledge your situation, explain that you have a recovery plan in place, and reassure customers they can still do business with you with confidence. Use positive, upbeat language, and, if possible, indicate that your situation was caused by external factors no one could have foreseen. Above all, says Magee, don't lie. If you lose your customer's trust at this critical time, you'll probably lose it forever.

After the crunch, use the same communication outlets to let your customers know. Don't remind them of your problems; focus on your achievements, and thank them for their loyalty.

Basic Instinct

Some people seem to instinctively do the right thing at the right time. You could call it luck, but Nancy Rosanoff calls it intuition.

"Intuition is an innate ability to tap into [your own personal] reservoir of information and wisdom," says Rosanoff, president of Intuition at Work in Pleasantville, New York. "It's knowing [something] when we don't know how we know it. It's also an ability to make decisions with incomplete information. Inventors, artists and successful entrepreneurs have all learned to trust their gut instincts when making crucial decisions."

Using intuition, Rosanoff says, can help you get to the real issues in any situation--to understand, for example, what the customer is really saying (or not saying) and to figure out the best response. "We're trained to think analytically, but that's only one piece of the pie," she says. "There's a whole realm of intuitive information that is equally valid and needs to be part of the decision-making."

To develop your intuitive skills, do a regular check-in with your feelings. Rosanoff suggests a simple exercise: Before any major decision, pause, take a deep breath, and ask yourself how you really feel about the situation.

Another decision-making aid is to flip a coin. The power, Rosanoff says, is not which side of the coin comes up but how you feel when you see the results. If you feel dread or anxiety, your choice may need rethinking. If you're elated and confident, your intuition is confirming the correctness of the decision.

"Intuition brings what you really feel about a situation to the surface," Rosanoff says. "It gets you right to what you know."

Stress Strategies

Stressed-out employees can rob your company of productivity. "When people feel their stress load is too heavy," says Paul Allie, a senior researcher who studies office environments for Steelcase Inc. in Grand Rapids, Michigan, "they respond in emotional, behavioral or physiological ways that can be harmful"--to themselves and the company.

Allie offers these tips for reducing workplace stress for your employees:

  • Reduce uncertainty. Employees need to know where they stand--especially if things seem rocky. "Give employees the real facts," Allie says. "Let them know when business is doing well, and don't allow rumors to proliferate if and when business takes a downturn. Even bad news, when given in the right way, helps reduce uncertainty--and that helps reduce stress."

  • Provide regular feedback. Don't limit your comments on performance to an annual evaluation; if you see someone doing a job well, praise him or her. "Employees want to believe they are contributing to the good of the company," Allie says.

  • Consider offering flextime. "Often a change of just 30 minutes or an hour [as to] when people come in to work can make a big difference in how they manage their lives away from work, which is often a big cause of stress," Allie says.

  • Encourage goal-setting. When people see clear, obtainable objectives ahead, they hesitate less and accomplish more.

  • Push decisions down. You'll create a stronger feeling of mutual trust when you allow employees to make decisions. Whenever you can, Allie advises, push decisions as far down the hierarchy as possible.

  • Promote teamwork. Encourage cooperation rather than competition. Allie says employees will be more positive about their environment if they get support from fellow workers.

  • Consider necessary learning curves. When employees need to learn new skills, allow sufficient time for training and practice.

Finally, Allie says, watch for signs that employees are distressed, but don't smother them with undue concern. "If you begin to sense that an employee is overwhelmed, ask them about their workload," he suggests. You may find out the problem is something personal--and a demonstration of understanding and support will help.

"Remember, people have lives outside of work," says Allie, "and though they may not want to discuss those issues, they will still benefit if they feel a sense of camaraderie with management."

Contact Sources

Mark Kassof & Co., 220 E. Huron, #209, Ann Arbor, MI 48104, (313) 662-5700;

Nancy Michaels, c/o Impression Impact, (508) 287-0718, fax: (508) 287-0410;

Radio Advertising Bureau, 261 Madison Ave., New York, NY 10016, (212) 681-7210;

Rothberg Associates, (818) 789-7495, fax: (818) 789-7495;

Uptown Valet, (202) 338-5900.


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