As business prepares for a winter of discontent, year-end cash bonuses at many companies have become the Ghost of Christmas Past.
With experts predicting worsening economic conditions during the next six months, companies nationwide are slashing bonuses and cutting back on holiday festivities.
Many that still pay bonuses are no longer giving them at Christmas but at the end of their fiscal years, often in April or June. And even those are based solely on individual and overall performance, not the spirit of corporate giving.
“Companies no longer guarantee bonuses as part of pay, and employees no longer expect them,” says Irene Cohen, president of her own personnel agency here. “Most companies are so obsessed with trying to figure out what the new year is going to bring, they’re not even talking about them.”
Perhaps the most notable bonus bust has been on Wall Street, which has shed 47,000 jobs since the stock market crash in 1987. Many investment banking companies are reeling, with cuts in the average bonus pool estimated at 30% to 50%.
Cash payouts in the financial services industry generally have taken a beating. At Chemical Bank here, where annual performance-based bonuses are given in February, they “will be down” next year, spokeswoman Marlene Bishop said glumly.
Some companies have eliminated year-end bonuses altogether, partly because of economic conditions, partly because of changes in compensation policies.
“We’ve done away with cash bonuses for line workers because it became too subjective--who got them and who didn’t,” said Barbara Schwartz, head of human resources for MSC Industrial Supply Co., a Plainview, N.Y.-based distributor of industrial tools and supplies. The company still offers incentive checks for top managers, ranging from 20% to 60% of base salary, paid out over two to three years, Schwartz said.
“This year’s been a little lean,” she said. In years past there had been a year-end party and the traditional turkey for each employee. But there will be no party for the company’s 250 employees this time. Instead, “we’ll give an additional vacation day,” Schwartz said. “And the turkey stays.”
It is the holiday amenities--foods and other nominal gifts--that remain at many companies, according to a recent survey by the Bureau of National Affairs, a Washington-based publisher of business and labor information.
The survey of 504 companies found that 42% offered employees small cash bonuses--usually around $125--or gifts including turkeys, hams, candy dishes, calendars, jackets and, in one case, family photo portraits.
There are some notable exceptions to the generally glum news about bonuses. At the Wall Street company of Goldman, Sachs & Co., about 3,000 employees who do not get commissions or profit-sharing proceeds will get a check amounting to 12 weeks’ pay, or 23% of base salary, this year.
But by and large, bonuses have slipped in the past two years, according to Towers Perrin, a New York-based consulting company. A survey last year found that bonuses for top executives had fallen 25% while bonuses for middle managers had dipped 1% to 3%.
More companies today are giving bonuses only if individual employees and the entire organization perform well.
“We’ve always been very performance-oriented,” said Lisa Mars, vice president for personnel at Computer Associates International, a large Garden City, N.Y.-based software developer. Bonuses at the company, which are distributed in March, may amount to half of total pay for some managers, Mars said.
At American Telephone & Telegraph Co., bonuses used to be a “springtime ritual"--a percentage increase pegged to one’s salary, said AT&T; spokesman Burke Stinson. But such “predictable gradualism” was abandoned after the company was broken up by the federal government in 1984.
Today, the company offers a variety of incentives, ranging from year-end bonuses for individual managers to “gain-sharing” plans--group-incentive programs where payouts are linked to performance of a particular unit, rather than of the company as a whole.
A few firms, such as Wyatt Co., a New York-based consulting company, are combining bonuses that employees can count on with those that vary with performance. Wyatt’s bonus-eligible employees--about 18% of its staff--get a “year-end adjustment” in January equal to about a month’s pay, according to Agnes Carson, human resources director for the New York region.
Managers also are eligible for performance-based bonuses, and all 2,700 employees take part in profit sharing, which recently has been about 12% of base pay, Carson said. Employees not eligible for bonuses get holiday cash payments of about $175.
Many companies, of course, simply have never liked the idea of year-end cash payouts. At Marks-Roiland Communications Inc., a Jericho, N.Y.-based publisher of weekly shoppers and other products, the company makes a point of spreading incentives throughout the year for its 268 employees, says Executive Vice President Steven Ferber.
Although the company does offer an annual $10,000 bonus (or, if the employee prefers, a speedboat) for top sales performance, it generally hands out perquisites such as dinners, trips for two and cash for good ideas and productivity improvements.
One “holiday gesture"--the companywide dinner--remains, Ferber said, but “our feeling is that too many companies reward employees one day a year and ignore (them) the rest of the year.”