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Year-End Bonus: How to Effectively Reward Your Employees

Dec 11, 2017

December is a time when where expectations are high, and so is the volume of chatter around the coffee machine in anticipation of that great corporate tradition – the year-end holiday bonus. 

If you are one of the CEOs, Boards, or Compensation Committees attempting to determine what to do about holiday bonuses this year, hold your thoughts.  

When it comes to end-of-year gifts – whether financial year or calendar year – business owners have found that cash bonuses are not always what their employees really, really want.

Why cash bonuses are not a winner.

Even though your employees may say they want cash, it’s actually not the best for boosting staff motivation and morale and here’s why.


The cash end of the continuum is more quantitative and financial in nature. It puts people into a calculative mode and the reward begs the question, “Is this a good deal?”  Because of this, cash is less effective at getting results. Whereas travel or tickets to a show or luxury merchandise are more emotional in nature and the question becomes, “Do I want it?” The farther away from the dollar sign, the more effective the rewards become at changing behaviour.

The problem with gift cards.

Store-specific gift cards are commonly rated as the number one preferred reward in surveys among program participants and many companies have introduced gift cards into their incentive and recognition strategies in recent years, however, they are simply not as effective as so-called ‘hedonic luxuries’. Recipients of gift cards will use them like cash - most likely to purchase everyday items - and never “connect the dots” between their performance and the reward. Further, since these rarely cover the full purchase cost of an item and end up acting like a discount.

Bear in mind that a gift certificate to a spa has very different motivational qualities than a gift card for gasoline. Can you imagine one of your employees filling up their tank with gas and thinking, “I am SO glad my company is covering my next tank of gas!”

In order to maximize the results of your year-end bonus program, choose the rewards that are meaningful and luxurious—something we’d love to have but wouldn’t buy for ourselves. These reward types are usually on the higher end of the efficacy scale.

So… what are better motivators than cash bonuses?

What’s better than cash?

Well, it depends on which generation you want to reward. We’ve taken it a step further and looked into the award categories that are most popular by generation.

Contact us to find out what gifts are more popular among Millennial, Gen X, and Boomers generational groups by geographical region.

In general, employee rewards that make a difference around the holiday season include:

  • Paid time off: Also known as “loyalty leave”, is when employees get an extra day of annual leave for every year they’ve been working for the company.
  • Merchandise treats: Female employees might love Body Shop gift packs and pashmina scarves since they are luxurious and much-desired, but we can rarely justify buying one for themselves, even though they’re not terribly expensive. The latest and greatest (affordable) treats for men include beard oil and portable power packs.
  • Handwritten notes of appreciation.
  • Food hampers.
  • Office parties.

How Millennials want to be recognized.


By 2020, the Millennial generation will make up more than half of the Canadian workforce. By 2025, that number will climb to 75%. A BI WORLDWIDE study found that Millennial employees are actually easier to engage than their non-Millennial counterparts. They want to be part of the solution. They want you to notice their efforts and they’ll work hard for you if they feel valued.

Further, Millennials prefer more regular, consistent feedback and encouragement. Maybe the speed at which things happen within the digital world we live in has ingrained that attitude into the Millennial generation.

We all know many people who post something on their social media accounts and then check every few minutes to see the “likes” start to come in. If they don’t get noticed in the form of “likes” it can be a real downer for them. With the attention Millennials are getting from their peers outside of work hours, do you think Millennials are getting the same attention from their boss at work? Most likely not. This is the social generation that lives for instant feedback and communication in their personal lives. Now they want it at work.

Because of this, we think it’s important to communicate, encourage, and reward your young, talented Millennials more often and in “real time.” If you think Millennials will be loyal and stick around if you just conduct a once-a-year review with an attached merit increase (like the Baby Boomers did) you’re very mistaken. A routine of awarding bonuses when outstanding work is observed could be the ticket to establishing a successful employer-employee relationship with members of the Millennial generation.

Social Recognition Platform.

Social recognition is the ideal employee rewards and recognition platform for managers and peers across the organization to build a culture of recognition, because it offers immediate, specific positive feedback whenever colleagues witness outstanding work and deliver that positive reinforcement at a time when it will be most immediate and impactful.