Rewarding staff at Christmas: party or bonus?

Holding a Christmas party or giving bonuses are popular ways to say thank you to your staff for their hard work throughout the year. These actions can also boost morale, but what do you do if you’re a small business and have a limited budget?

Not all demonstrations of appreciation have to be costly. Here’s a rundown of the pros and cons of bonuses, Christmas parties and other options you might want to consider.

Should you give a Christmas bonus?

Bonuses incentivize workers to meet their targets and are a common tool for attracting and keeping employees. It’s up to you as the employer how much you can afford to give and several studies have shown that workers would prefer a cash bonus to a party if offered the choice.

Unless Christmas bonuses are specifically based on performance, they should be given to all staff. This can make them costly for small businesses and can create an expectation that staff will receive them every year. Plus, while bonuses can improve motivation in the short term, other factors, e.g. job satisfaction are more important if your goal is to motivate your staff and show your appreciation.

Should you have a Christmas party?

Christmas parties have long been cited as a way to improve motivation and productivity. They can also set the tone for the next year ahead – see why we think you should throw an office Christmas party.

For businesses, organising a Christmas party may be a more cost effective option than giving staff a bonus. For each tax year the HMRC allows businesses to spend up to £150 per worker on functions. This allowance includes food, drink, transport and accommodation, but does not extend to freelancers or contractors.

If you are throwing a Christmas party:

• Remember that it doesn’t have to be a lavish affair. Choose a venue that’s free and offers a good package for food/drink. Decide and let your staff know what the business will pay for, to avoid misunderstandings. For example, you may choose to pay for drinks with the meal, but state that workers will need to pay for further drinks after this.
• Invite everyone, but don’t make it compulsory – some workers will choose not to attend or may have other plans. Also be clear on whether the party is just for staff or includes partners.
• Try to choose a time and date when as many staff as possible can attend.
• If any of your staff need to be in work the next day, be clear that they are expected in on time. Calling in sick because they have a hangover isn’t acceptable.

Boosting morale around Christmas

While an end of year bonus or Christmas party is great if you can afford it, there are other ways to show your gratitude without spending much or any money at all.

• Offer flexibility over the Christmas period if you can. This may depend on whether Christmas is a busy or slow period for your business. For retailers, it is often the busiest time of the year, but many small businesses close during this period. If you can, allow your staff to leave early on Christmas Eve.
• Give your employees a gift such as a box of chocolates or a bottle of wine. If you have a small team, you may be able to make your present a little more personal by linking it to their interests.
• Take your staff out for lunch or a drink after work. This is cheaper for your small business than a full-blown party and may mean more workers are able to join in.
• Decorate your office. You don’t have to cover your whole office, but decorations can help to create a festive atmosphere. This doesn’t have to cost much and you’ll be able to reuse them.
• Organise a festive quiz to bring a bit of merriment into the office.
• Allow staff to dress more informally in the run up to Christmas, when meetings may be less frequent. Or take part in Save the Children’s Christmas Jumper day on Friday 12 December. Over a million people took part last year and it’s a good way to bring a bit of fun into your office while raising some money for charity at the same time.

Show your appreciation throughout the year

You don’t have to wait until the end of the year to show your appreciation. Here are some free and low-cost actions you can take throughout the year.

• Say thank you and mean it. Even better, say it publicly so other staff hear your praise.
• Reward an employee when he/she reaches an important target or milestone. If it’s timely and individual to that member of staff, it can mean more to that person than a generic thank you at the end of the year. It doesn’t necessarily have to be monetary reward. For example, our managing director takes a centre manager out for lunch when they achieve 100% occupancy at their business centre. It’s a simple, but personal way to say thank you.
• Mention the employee in your company wide email or newsletter.
• Create a monthly wall of fame or award scheme to recognise top achievements. We have programme called values champions, which recognises workers who have gone above and beyond their job and demonstrated one or more of our values.
• Celebrate birthdays, even if it’s just with some cake. Decorate their office desk for milestone birthdays.
• Encourage suggestions from your team on how to improve your business. If you can make them feel that their opinions are valued, they are more likely to both feel respected and more motivated to work hard.