Bonus Checks Are Becoming a Part of Christmas Past
When the holiday season rolls around each year, Elke Eastman and about 5,000 of her fellow memployees at Beckman Instruments get something that most workers in this country have only heard about: a Christmas check.
Beckman is one of the few large corporations in America that gives each of its employees Christmas cash that is not tied to profit sharing or incentive plans and considered part of employees’ annual compensation.
The Yuletide gift-giving began shortly after Arnold O. Beckman founded the scientific instruments firm in a Pasadena garage 53 years ago. The Christmas check survived the company’s subsequent growth and move to Fullerton and has remained constant through recessions, business slumps and Beckman’s 1982 merger with SmithKline Corp.
“It comes with a card from Dr. Beckman,” Eastman said, “and is done because Dr. Beckman considers the company and its employees as a family--even as big as we are now--and sees it as one way of bringing that point home to everyone.”
It is a practice, however, that flies in the face of conventional management theory--a line of thinking that is making the Christmas bonus as unusual as candles on a Christmas tree. Employees, the current thinking goes, should see a direct link between rewards and performance. And performance is to be assessed and rewarded individually, not with a party or frozen turkey or even a year-end check that everyone else is also getting.
“Christmas bonuses are dying out . . . because they are not a good use of a company’s dollars in most cases,” said Mark Lipis, a compensation specialist with the Wyatt Co. in Sherman Oaks.
“A bonus equal to one month’s pay is equal to a raise of about 8%,” said Lipis, “yet in 1989, the average pay increase is likely to be between 4% and 5%. So it doesn’t make sense to give a big bonus and then spend less on salaries.”
Most Had No Plans
Lipis said he isn’t opposed to Christmas bonuses “if a company does it because of tradition or warm feelings for employees or to reward them for seniority. In those cases, a holiday gift is wonderful. But people shouldn’t come to think of it as an incentive plan.”
A lot of top executives adhere to that line of reasoning.
In a recent nationwide survey of 211 businesses, the private Bureau of National Affairs found that, other than granting holiday time off, nearly 70% of the companies had no plans for Christmas gifts or bonuses for employees.
Only 14% of the respondents planned to give year-end cash gifts to non-management employees. The figure rose only slightly, to 17%, when bonuses to managers were included.
The survey showed that only 54% of the companies were sponsoring some sort of Christmas party or reception for employees.
And while getting time off on Christmas and New Year’s Day is almost universal, less than half the respondents were giving workers time off on the Friday before Christmas this year, and only 28% were giving time off on the Friday before Jan. 1.
The decline of corporate Christmas giving to employees “has a lot to do with changes in employee and management attitudes,” said William Burns, president of Telesearch, a Massachusetts placement firm that has conducted several Christmas bonus surveys in recent years.
“When you had a more paternal environment, Christmas bonuses were a reasonable way of patting people on the back,” Burns said. “But as people and companies have made loyalty less and less an issue, bonuses have become performance-based, and things like Christmas bonuses are going out.”
At Fluor Corp. in Irvine, a major international engineering and construction firm, the parent corporation doesn’t believe in Christmas bonuses, said spokesman Rick Maslin.
Employees are paid well for their work, and any Christmas celebrations are left “to departmental discretion,” he said.
The company has several thousand employees around the world, said Maslin, “and as we got large, it got unwieldly and impersonal to try to do something for everyone. It also is very hard to come up with things that are as meaningful, much less as equitable, to people who work in Saudi Arabia and Malaysia as they are to people who work in London or California.”
‘Regimented, Formulaic’
The story is much the same at Pacific Mutual Life Insurance Co. in Newport Beach. “We have a turkey luncheon at the company cafeteria,” said spokesman Robert Haskell. “Otherwise, we have a sophisticated incentive compensation program that awards performance and merit. It works well, and we have never done Christmas bonuses.”
Lawrence A. Wangler, compensation specialist with TPF&C;, an arm of the Towers Perrin consulting group in New York, criticizes most corporate Christmas bonus programs as “regimented and formulaic. They can work against the company because good people and bad people all get the same, and that can result in hurt feelings.”
To Cathy Keene, director of compensation and benefits at MAI Basic Four in Tustin, it isn’t important to ask why Christmas bonuses are disappearing.
“The better question is, ‘Why do it?’ It is just not part of our compensation philosophy,” she said. “We pay people competitive salaries all year long, and any bonuses are based on performance, not because it happens to be a holiday.”
The company doesn’t look at Christmas as so much humbug, however.
“In the past we have given Christmas gifts to employees,” Keene said. “Sweaters with the company logo, certificates for turkeys and things like that. It is a way to say ‘happy holidays.’ ”
But even the giving of non-monetary Christmas gifts is a minority position in business these days.
The Bureau of National Affairs survey found that three-fourths of the firms responding had no plans to give employees even a token gift item.
One that does is Knott’s Berry Farm in Buena Park, which throws an after-hours theater show and dinner for employees and their children and also gives employees a Christmas turkey.
Free Turkeys Still Popular
It is a way to show appreciation, said spokesman Stuart Zanville, and is entirely separate from the annual distribution of profit-sharing checks, which Knott’s does not consider part of a Christmas gift to its workers.
Perhaps the most common Christmas gift that companies bestow on their employees is the free turkey or ham.
A survey of the 20 largest employers in Orange County showed that half hand out frozen birds, canned hams or certificates for Christmas groceries.
A number of large manufacturing firms, especially in aerospace and electronics, also give employees the week between Christmas and New Year’s Day as extra days off that don’t affect their regular vacation time.
The week off is “very, very well received,” said George Wiley, director of employee relations at Rockwell International. With 116,000 employees, giving turkeys or other gifts would be too unwieldly, he said.
Hughes Aircraft spokesman Mike Murphy called the practice of shutting down for the week between the two holidays “an enlightened personnel procedure.”
Hughes, he said, has 73,000 employees “and we’ve never done anything else for Christmas. It is better just to pay them well all year.”
There are, however, other, more practical reasons for shutting down between Christmas and New Year’s Day, officials at several companies acknowledged.
It eliminates the quality control problems that multiply in a manufacturing plant when people are absent or feeling the effects of over-indulgence in holiday spirits, they said.
Still, the extra week of paid leave is a gift that is appreciated by employees, said Jerry Ringer, a spokesman for Cubic Corp. in San Diego. Cubic has been granting the extra time off for 15 years, he said, and has found that it helps build company spirit.
That, in part, is what gift-giving is all about and is why Christmas gifts and bonuses are more prevalent in small firms, where it is easier for employees and employers to feel like family, said consultant Lipis.
If that is the case, then Vicki Heston Personnel Services in Irvine is a classic example.
Heston has only six full-time employees and regularly showers them with gifts.
“I don’t just wait for Christmas,” she said. “I appreciate my staff. I couldn’t make it without them, and I feel blessed to have such good people.”
Heston said she doesn’t have any formal rules for giving gifts. “I don’t do things consistently or by some formula. It’s done by choice and as the spirit moves me. I’ve given cash and gifts and gift certificates and flowers and candy. We do things at Easter and Thanksgiving and at times when it isn’t a holiday. Giving your employees a present is a nice way to thank them for the job they are doing.”
COMPANIES’ 1988 HOLIDAY PLANS Employee Gifts and Bonuses Christmas gift item Management Employees 23% Non-management Employees 24% Year end bonus/cash gift Management Employees 17% Non-management Employees 14% No gifts or bonuses Management Employees 65% Non-management Employees 66% Paid holidays and shutdowns These percentages of company employees will receive the following days off with full pay: Friday, Dec. 23 41% Monday, Dec. 26 95% Friday, Dec. 30 28% Monday, Jan. 2 82% Other paid holidays 32% Operations shut down for one week or longer 25% Source: Survey of 211 companies by Bureau of National Affairs Inc. STEVEN NELSON / Los Angeles Times
