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The holiday bonus: From turkeys to incentive plans

Marketplace Contributor Dec 14, 2012

The holiday bonus: From turkeys to incentive plans

Marketplace Contributor Dec 14, 2012

Maybe you can remember that scene from National Lampoon’s Christmas Vacation when Chevy Chase’s Clark Griswold, who has been anxiously awaiting his bonus, finally gets the all-important envelope in the mail.

That scene shows how far we’ve come from employers giving small gifts, like turkeys or watches, back in the late 1800s, to the cash payouts we associate with holiday bonuses now. Princeton sociology professor Viviana Zelizer says in 1902, J.P. Morgan helped usher in that practice, giving employees an extra full-year’s salary.

“One can trace a transformation, from a gift from the employer to the employee, and gradually emerging as an entitlement — something that the workers expected,” she says. 

By the 1950s, Zelizer says, the National Labor Relations Board ruled that unions could negotiate the bonus as part of the compensation package.

Claremont-McKenna psychologist Ron Riggio says there’s a risk in giving holiday bonuses. Let’s go back that movie character, Clark Griswold.

“Griswold comes to expect the bonus, and so he’s already sort of pre-spent it, and then the boss becomes essentially the bad guy in the whole scenario,” Riggio says.

In case you don’t remember, Clark Griswold opened his bonus envelope to recieve a one-year membership to the Jelly-of-the-Month Club.

It could be worse. I once got a package of hot dogs — yes, frankfurters — from one of my early employers. And these days, management consultant Bruce Tulgan says the slow economy has caused the boss to cut back or even drop the time-honored holiday bonus all together.

“They see it as an opportunity to shift gears — hey, we’re not going to do this anymore, or we’re going to change how we do this,” he says.

In that case, Claremont-McKenna’s Ron Riggio advises employers not to just give workers the silent treatment:

“If you can’t afford to give bonuses or, you know, you’re unwilling to do it, explain why. That way, employees have clarity. Honesty and transparency’s always the best policy,” he says.

There is some hopeful news about the future of the holiday bonus, at least among small businesses surveyed for American Express. Researcher Alice Bredin says two years ago, 25 percent gave bonuses. Last year, it was up to 29 percent, and this year, 35 percent of small businesses say they’re handing out bonuses.

Bredin says that’s not just good news for those receiving one, “I pretty much see bonus-giving tracking to a business’s ability to give a bonus. When they can afford to do it, they do do it. So the fact more business owners are giving bonuses this year says customers are coming in the door in greater numbers.”

Which bodes well, of course, for the whole economy.

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