Christmas bonuses no longer in season

A new trend in business may put a damper on the holiday spirit for some. A new study finds holiday bonuses are falling out of favor.

The study, conducted by the aptly named Chicago consultancy Challenger, Gray & Christmas Inc., found that 43% of firms surveyed do not give year-end bonuses to employees. This is up more than 50% from a similar survey conducted in 2007, says Challenger's CEO John Challenger. “This is a sign that businesses are moving toward a new era of employee compensation,” he tells Coffee Talk.

Challenger explains that with employee tenure decreasing and output measurement techniques becoming more accurate, holiday bonuses don't make sense anymore. “Gifts throughout the year based on an employee's productivity are more beneficial to the firm as motivational tools,” he says. “These bonuses used to be to encourage longevity, but that's no longer relevant.”

Economic conditions have contributed to the trend as well, with bonuses being the first casualties of cost-reduction. But Challenger sees the shift away from expected year-end bonuses as a long-term phenomenon.

Although the trend seems a bit disheartening, Challenger saw signs of economic recovery in the research. He noted that the quit rate, a measure of the percentage of the work force who voluntarily left positions, is increasing. “It certainly shows the economy is getting stronger.”