Kira Vermond: Forget the bonus, 2008 is about job security
Wednesday, December 3, 2008 | 12:09 PM ET
Money Talks is a daily business column from CBC radio.
By Kira Vermond, a Canadian freelance writer and regular contributor to publications such as The Globe and Mail and Chatelaine.
It’s beginning to look a lot like … holiday bonus time. You know, when the boss weaves through the cubicles passing out merriment in the form of cash, gift cards or some kind of food item.
But with stock tickers lighting up a lot more red than green this troubled holiday season, are year-end bonuses becoming a ghost of Christmas past? Never mind that five-grand cheque for a job well done, the question is: This year, will you even score that $47 spiral-cut holiday ham?
Let’s take a moment to consider last year’s bonus trends.
In 2007, a study by Hewitt Associates in the U.S. showed that only 34 per cent of companies planned to offer any kind of bonus at the end of the year. Two-thirds of the companies that dropped their programs did so in the past six years.
And that was in a booming economy.
Just recently, Cathay Pacific Airways went on record to say it had decided to scrap its traditional end-of-year bonus for the entire Hong Kong staff. It can’t be the only one feeling the pinch.
So why, even in times of economic uncertainty, do some companies still give holiday bonuses? It’s not to inspire loyalty. Studies show bonuses don’t.
Maybe companies do it because they simply want to thank their employees and show appreciation. That’s what the Hewitt study found.
The problem is, if an employer administers a bonus program poorly, they can expect their workers’ holiday cheer to turn sour. Give everybody the same amount and the top performers will get angry. Hand bigger cheques - or bigger turkeys - to a select few and brace yourself for the backlash from everyone else.
No wonder HR experts propose that holiday bonuses - actually, any kind of bonuses - be tied to two criteria: How well the company is doing and how well the employee performed.
Good managers communicate these measures throughout the year, so there are no surprises.
Just remember, no matter if you get a wad of cash or a big goose egg this year, job security is still going to be an issue in 2009. Because last year, four of the biggest U.S. investment banks - Goldman Sachs, Morgan Stanley, Lehman Brothers and Bear Stearns - handed out an estimated $30 billion US in bonus money. And we all know what happened next.
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