Christmas bonuses and their impact on company culture

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With the holidays almost here, some HR professionals will have already determined employee rewards – others may have even divvied them out– but how did you make your decision? One expert is saying more managers need to take company culture into account when considering Christmas bonuses.

Managers have more to worry about than striking a balance between austerity and generosity, says employment lawyer Dan Peyton. They need to make sure end-of-year bonuses are sending an ethical message, in line with company culture.

 “Businesses can risk being seen as profligate and irresponsible, rewarding failure or throwing cash about, or as exploiting a hard-working workforce and their loyal customers,” warns Peyton. Employee bonuses need to be taken seriously, he stresses.

Recognizing high performance with a financial reward may be one of the easiest ways to improve employee morale and increase retention rates but, according to Peyton, there are other key factors that employers need to carefully consider.

End-of-year ethics

According to Peyton, businesses should “enforce ethical and responsible remuneration policies that are fair, equitable and above all about achievement.”

“Performance-related rewards must promote corporate values and incentivise employees to incorporate them into the way they work,” says Peyton. Unethical issues, like avoiding tax or taking advantage of foreign laws, are often regarded as matters of public interest and it could be detrimental to your company if such behaviour is rewarded.

Code of conduct

One of the most problematic dilemmas HR managers face on all fronts is dealing with a high-performing employee whose behaviour isn’t exactly ethical. Whether it’s breaching compliance rules or taking risks with company money – it can be difficult to discipline them when the risk pays off – let alone know how to reward them.

“It is in these circumstances that businesses need to take a firm line or risk facing public, regulatory and legal consequences,” he asserts. Managers can’t just reward employees based on results alone.

 “Bonus payments may be tied to department or company performance, not just individual results,” Peyton suggests.

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  • David Cohen on 2014-12-16 12:12:08 PM

    While I would agree with the statement "Performance-related rewards must promote corporate values" I would go further. Regardless of the success of an individual if that person does not consistently, without exception, demonstrate the behaviours of the company values, the person is not entitled to any reward. If you reward a person who does not live the values you make the employees realize the values are aspirational. As a result no one takes them seriously and become cynical about the company and it's culture.

    However there is a bigger issue to be faced that should financial rewards be the way to go at all.

    Economists at the London School of Economics looked at 51 studies of pay-for-performance plans, inside of companies.

    They found: "... that financial incentives can result in a negative impact on overall performance.”

    There is much literature, of late, validating this statement. So the question if why should we give financial rewards. Plus if you give them year after year they are not a reward they become part of the expectation and base salary. So why not stop playing the games with employees and just give people from the start of the year what you intend to give them. If the person does not meet their commitments lower the salary for the coming year, put them on a performance improvement plan, and if they don't work out let them go. But make that clear when they start working with you.

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