Year-End Bonus or Holiday Thank You: Which works best for you and your team?

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Teresa Riccobuono

This time of year I am often asked by advisors, "What should I do about holiday bonuses?" Although this seems like a simple question, it is certainly not.

I'm going to start out by making the assumption that you are paying your team members fairly. If you haven't done a salary search recently, I encourage you to do so. If you want to retain good employees, make sure they are compensated fairly for the work they are expected to do.

Now, let's talk about the difference between a bonus and a thank you.

When to pay a bonus

A bonus should be paid to someone who has done more than their basic job duty.

Oftentimes, advisors feel compelled to pay a year-end bonus even if they don't feel their employee is deserving. It's just expected – by the employee and thus the advisor.

But a bonus should be earned. If your employee has gone above expectations, a bonus is in order.

Compliance related to paying a bonus

Every financial institution has its own rules regarding payment of bonuses to staff members. Before making any determination on a bonus, make sure you are clear on what is acceptable. The various categories of staff have differing requirements or constraints.

For example, some positions allow for bonuses based on practice growth, but many do not. A bonus based on profitability is an alternative option.

Bonuses should, at least in part, be based on an activity or outcome that the employee has control over. A bonus could be based on the number of client appointments set (a weekly or monthly average for the year), or that every client has been met with the appropriate number of times throughout the year based on the service model in place. It could be based on reaching the goal of number of lunches scheduled with centers-of-influence for the year, or it could be based on the number of attendees to a workshop. In each of these scenarios, the employee has control over how hard he or she works to reach the goal. This is one area where creativity of bonus parameters can come into play.

Holiday thank you

A holiday thank you has nothing to do with an employee going over and above his or her basic job duty. A holiday thank you simply states that you appreciate the work that the employee has contributed to your practice and the year-end holidays are an appropriate time to thank them for their service.

Where a bonus often is paid through payroll as an additional paycheck, the thank you is often paid with a gift certificate or gift card. Here is where you can personalize your thank-you gift.

One advisor I know has a client service coordinator who always wanted a Coach handbag, but felt guilty about spending that amount of money on herself when there were so many conflicting needs for her paycheck.

Knowing she would spend any money or generic gift card on the family versus herself, the advisor purchased a Coach gift card so her employee would spend the money on herself. After all, she earned and deserved the gift. Now, every time the client service person uses her Coach handbag, she is reminded of how her skills and abilities are appreciated by her employer.