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Just a few years ago, it was pretty standard practice for companies to dole out holiday bonuses and throw parties for their employees, but as we fell deeper into the grips of a recession, most of those end-of-the-year perks all but disappeared. Economically, 2009 was a particularly tough year with layoffs and cutbacks being the norm for most. Although we’re not out of the woods yet, there are signs of things getting better.
According to the American Express 2010 Open Small Business Holiday Monitor survey, 44% of the 516 small-business owners and managers polled said they planned to give their clients or customers gifts this year, down slightly from 47% from 2009. They’re also planning to spend an average of $740 this year versus just $455 last year.
William S. Parrish, Jr. CEO/President of Noble Strategy, LLC, a Harlem, NY-based construction management business, can attest to how the shifting economy has affected his ability to show appreciation to his employees and clients during the holiday season. In years past, profit sharing distributions were common practices for his employees but when the company lost nearly $720,000 in revenue in 2009, Parrish had to tighten the purse strings, which resulted in layoffs, pay cuts and no bonuses. After adjusting his business model and learning to “do more with less,” Noble Strategy has managed to increase profitability this year despite revenue being down about 20%.
“Last year there was no distribution in our profit sharing plan but this year we will make a distribution, which is approximately 10% of net income,” reveals Parrish, who also made several new hires this past year. “And we have very small tokens of our appreciation that we were able to give out to our employees.”
Despite the upturn in profit, though, Parrish warns of the downsides of being too generous in a tough economy. “If you give out all the money at the end of the year you run the risk of the banks looking at you like, ‘Well, you really didn’t retain any money and your financial statements aren’t what we’d expect to see,’” he explains. “Then you go right back into that cycle that the banks won’t lend you money, which makes it very difficult for you to operate your business and move forward.”
But no one wants to be a Scrooge, especially when their employees are putting in the work to help the company succeed. In response, some employers have adopted creative alternatives to the standard bonus, such as gift cards/certificates, additional paid (or unpaid) vacation days, health incentives like gym memberships and smoke cessation courses, increased productivity incentives throughout the year, or something as simple as a group outing or office pot lucks. The point is to show the people you work with that their efforts throughout the year have not been overlooked by giving them some token of appreciation no matter how small. “I think everybody in this recession has gotten used to things not being the way they used to be in terms of money and bonuses,” says Parrish. “But when things go well you also want to reward those people.”
Read more of our holiday-related articles…