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Year-End Bonus or Holiday Thank You: Which works best for you and your team?

This time of year I am often asked by advisors, "What should I do about holiday bonuses?" Although this seems like a simple question, it is certainly not.

I'm going to start out by making the assumption that you are paying your team members fairly. If you haven't done a salary search recently, I encourage you to do so. If you want to retain good employees, make sure they are compensated fairly for the work they are expected to do.

Now, let's talk about the difference between a bonus and a thank you.

When to pay a bonus

A bonus should be paid to someone who has done more than their basic job duty.

Oftentimes, advisors feel compelled to pay a year-end bonus even if they don't feel their employee is deserving. It's just expected – by the employee and thus the advisor.

But a bonus should be earned. If your employee has gone above expectations, a bonus is in order.

Compliance related to paying a bonus

Every financial institution has its own rules regarding payment of bonuses to staff members. Before making any determination on a bonus, make sure you are clear on what is acceptable. The various categories of staff have differing requirements or constraints.

For example, some positions allow for bonuses based on practice growth, but many do not. A bonus based on profitability is an alternative option.

Bonuses should, at least in part, be based on an activity or outcome that the employee has control over. A bonus could be based on the number of client appointments set (a weekly or monthly average for the year), or that every client has been met with the appropriate number of times throughout the year based on the service model in place. It could be based on reaching the goal of number of lunches scheduled with centers-of-influence for the year, or it could be based on the number of attendees to a workshop. In each of these scenarios, the employee has control over how hard he or she works to reach the goal. This is one area where creativity of bonus parameters can come into play.

Holiday thank you

A holiday thank you has nothing to do with an employee going over and above his or her basic job duty. A holiday thank you simply states that you appreciate the work that the employee has contributed to your practice and the year-end holidays are an appropriate time to thank them for their service.

Where a bonus often is paid through payroll as an additional paycheck, the thank you is often paid with a gift certificate or gift card. Here is where you can personalize your thank-you gift.

One advisor I know has a client service coordinator who always wanted a Coach handbag, but felt guilty about spending that amount of money on herself when there were so many conflicting needs for her paycheck.

Knowing she would spend any money or generic gift card on the family versus herself, the advisor purchased a Coach gift card so her employee would spend the money on herself. After all, she earned and deserved the gift. Now, every time the client service person uses her Coach handbag, she is reminded of how her skills and abilities are appreciated by her employer.

Individual or team thank you

If you prefer to do something to thank the whole team, consider a nice dinner or lunch. Keep in mind that if you are thinking about a dinner, this often includes spouses and significant others. Think about team members who are not in serious relationships. Will they feel like a third wheel? Another thing to consider is the fact that some employees may not live close to the office or location of the event. It might put undue pressure on one or more of your employees to coordinate getting home to pick up children from school, getting their children situated for the night and then heading out again for your event.

Some advisors want to hold their event over the weekend on a Saturday evening for dinner or Sunday for brunch. This may add to the complexity of team members being able to participate.

A lunch (or an extended lunch) can be exclusive to the team and alleviate some of this coordination. If you do not have a good selection of local restaurants and your office facilities allow for it, a catered lunch is another option. If you plan to give each employee a similar token of thanks, this can be done in conjunction with lunch.

If you want to do something other than lunch, there are a number of team-building activities you can consider: ceramics, painting, indoor sky diving, paint ball and spa treatment. The list is endless.

To find out what your employees would like to do and when, ask them. It is that simple.

A team thank you is appropriate if you hit your goal(s) and it truly was a team effort. If just one or two employees were instrumental in you reaching your goals, then go back and re-read the section on paying a bonus for an employee going above and beyond expectations.

If your team seems to enjoy each other's company, a group event works well. If there is contention within the team, a holiday get together may not be well supported or attended. If you find yourself in this situation, contact me directly so we can discuss how to move past this current predicament.

As I mentioned earlier, the topic of holiday bonuses is not a simple one. To bonus or not to bonus, that is the question. But just the first question. The next question is how to bonus, followed by how much. If you decide a thank you is more in line with what is appropriate, think about whether an individual gift is more desirable to your employees versus a team thank you.

No matter what you decide to do, make sure it is done thoughtfully and graciously.

Have a terrific holiday season!

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