Problems with the Christmas Bonus and Review

Posted on November 21, 2014 in Consulting

We are coming to that time when small and mid-size employers conduct employee reviews and consider year-end bonuses and raises.   The question is should the holiday season be the moment for an employer to assess an employee’s productivity and for setting bonuses and raises?  Consider instead the large corporation model:  Keep important HR decisions separated from the holiday season.

I had lunch with a friend and HR Director of a large company recently.  He mentioned his rule: After November 10 terminations stop unless it involved theft.  There is a lot of truth in this rule.  Employers hesitate to make termination decisions during the holiday because of the fear of how it would look if the firing decision ever got in front of a jury.   Why then is it that employers expect managers to conduct performance reviews at this time of year.  Often, a bad review is just an initial phase toward termination.

Sometimes, forcing reviews at year-end results in a kinder than warranted evaluation and tempers employee assessments. We get a little soft at this time of year as people exchange gifts and cards and talk about what they are getting their kids.  It is tough to detach the holiday atmosphere when walking into a room to conduct an employee review. An employee who might need to be advised they are a below average performer (and need to consider other opportunities) might get a different message from a holiday-induced sympathetic boss.

The same emotion can penalize good performers too by forcing parity in bonuses.   The bottom performing employee might get a better bonus and greater share of the bonus pool because the holiday season is a bad time to punish performance.  That leaves less money for top performers.

I cannot ignore the sentiment that end of year bonuses are tied to Christmas gifts.  But let me suggest another solution.  Give all employees a small, uniform bonus and leave the larger performance bonus for another time of year.

I hope you enjoy your holidays and don’t have to spend them working on employee reviews and bonuses.