Don't Make These Mistakes When Giving Holiday Bonuses! (feat. Chris Hunter)

Ho ho, what's going on, everybody? It's Richard Kohberger here, the blue collar nerd. Well, there's a chill in the air. The decorations are out. You can practically feel the spirit of giving floating around you in the air. That can only mean one thing. It's that time of year again. That's right, Holiday bonus time. Now, a lot of companies do holiday bonuses of some sort, and they're meant to be a gesture of generosity, they're meant to be a culture boost. But done incorrectly, holiday bonuses can actually have a very negative impact on company culture. So the first mistake that a lot of companies make around company bonuses is just basically not having a plan. And that's a formula for a lot of unnecessary anxiety and disappointment from your team. Instead, you should have a clearly defined plan from the very beginning of the year of how these holiday bonuses are going to be calculated. And equally important, everybody in the company should be made aware of what that plan is so that there's no surprises. And when you're structuring that plan, it's important to think, okay, this works today, but is it scalable? If we double or triple in size next year, are we still going to be able to afford this plan? Here's my friend and colleague Chris Hunter, who learned this lesson the hard way when he was operating at his company, Hunter Heating and Air.

You know, early on, when I just had a few employees, you know, heck, I wanted to be generous and reward them, so I gave a very generous Christmas bonus. And then here comes the next year and I'm like, oh, no, what am I going to do this year? We grew in size. We had like three times the amount of people, and we didn't have near as good a year. And yet everyone's kind of, you know, licking their chops, they're watered up, they're ready for that big old Christmas bonus like last year. And I, I had to do it. And it was, it was hard and it cost me dearly. But, but I realized then, oh, we gotta, we gotta have a plan. We gotta make this thing scalable. We got to set some, some goals around why we're even doing it and, and figure out how to make it something that's sustainable and that's a perk and can help the culture instead of hurt it. I think about, you know, the Christmas vacation movie, you know, all the time when they're expecting the big bonus and, you know, they've even already got the pool construction going and they're waiting for it. And then when they got it and it was that one year membership and the Jelly of the month club. Oh God, Clark. That's the gift that keeps on giving the whole year. Everyone's just totally disappointed. I think that's what can happen in a, in our companies if we don't have something structured where they can plan on what's going to happen.

Okay, so then how exactly do we come up with a holiday bonus structure that's going to be simple and scalable and make sense to everybody? Well, there's no one exact right way to do it. It really depends on you, your company, and what you're trying to accomplish with this holiday bonus for you. For Chris, he really wanted to reward teamwork. So the money for his holiday bonuses came from two places. One was that any money that came in from selling scrap metal from old units that the company had replaced, any money that came in from that would go towards the holiday bonus fund.

A beautiful thing happens when you do that, when, when everyone knows that the scrap is going into their Christmas fund or their bonus, it rarely disappears because if it does, now you've got the team policing this thing, not just the, you know, the owner saying, hey, that's my money. Because it wasn't, it was all of ours and we were sharing it.

Now, the second source for Kris's holiday fund came from a percentage of the revenue for the month, assuming that the company hit the revenue goal for that month. So at the beginning of the year during annual planning, a revenue goal was set for every single month of that year. And if the company hit that revenue goal for the month, then a percentage of the total revenue for that month would go into the holiday bonus fund. There's no exact right percentage for doing something like that, but for Chris, it was 1%.

Yes. So I mean, and this amount right here, I mean, this is arbitrary. This is what you, you budget and set as your company. So for us, 1% was an easy number. It made, made sense as far as it would scale with the number of employees and everything that we had. And every month that we hit it, as long as the employee workforce in that month, then they were eligible for this, this, this bonus in that month. So, so that way everyone got the same amount at the end of the year based on if they were there the whole year, they got every month of the bonus that we hit. They only worked there six months, you know, they would only get the second half of the year that we, we did it. But, but I, I divided it up evenly so the csr, service tech, everybody, we all shared the same amount.

And it was, it was divided equally. There was no, like waiting where a technician got more than a CSR or nothing like that.

No, yeah, that, that's exactly what it was. And I even tried this a couple ways. One time we paid it out like halfway through the year, we gave them a piece of it. And then the other time we waited the whole year. I highly suggest just waiting till Christmas because what happened was time Christmas rolled around, everyone kind of forgot about getting that. That one in the middle of the.

Year feels smaller, right?

Yeah, this ain't quite as big as it, as it was last year. So keeping it simple was so much easier. Just, hey, everyone's getting the same, here's what it is. And, and then you could track it through the year really easy too, you know, so people had a pretty good idea of what was coming. So it wasn't like a huge surprise. They know that, hey, we hit our budgeted number seven months out of the year. The only variable that was kind of a nice surprise was how much scrap money did we actually acquire through the year. But the other part was pretty, pretty trackable.

Now I think it's an important caveat to point out that while that holiday bonus plan structure does involve some sort of performance metric, it is a company wide performance metric, not an individual's performance metric. Personally, I believe that individual performance based bonuses should be a separate thing from holiday bonuses because I think there's kind of a different mentality behind those two things. With an individual performance bonus, it's a very specific reward for you, the individual. But a holiday bonus is really just meant to be a gift to spread the wealth. But we know that the reality of the situation is that if the company doesn't do as well one year versus the other, then the company's not going to be able to afford the same holiday bonus one year versus the other. That's true whether you have a publicized plan or not. So you might as well have a plan and let everybody know about it. That way there's no surprises and it's less likely that it'll be perceived as you just being stingy with the money. And Chris agrees on this point as well. He thinks they should be separate.

A lot of people confuse the Christmas bonus with personal performance bonuses. I don't think it's wise to mix the two. I think everyone should have their own performance bonuses, individuals. But for me, I wanted to have something that would build morale, kind of encourage teamwork. Plus, well, they could count on it coming at, at or near Christmas. So they could use it for their. Their holiday shopping or whatever they wanted to do with it.

Now, it's also a good idea to always pay your holiday bonus on a defined date, a date that the team knows about ahead of time, preferably a date early enough that employees can still use the money for their Christmas shopping if that's what they're going to do with it. And again, this is just a way to reduce unnecessary anxiety for your team. By the way, if you're going to do some sort of holiday party for the team, that's also fantastic. Just make sure that the money to throw that party doesn't come from the holiday bonus fund. That would be a great way to create a lot of negative sentiment around the holiday party. It should come from a separate, like, team appreciation. And you probably also want to be careful about the type of environment that you're creating with the holiday party. Kris also learned that lesson the hard way.

I decided I was going to treat them. I was going to rent this party bus. We were going to drive, like, an hour and a half to Oklahoma City, take him out to a nice restaurant, you know, really just do it upright as part of the Christmas extra bonus. Well, it backfired on me. So we get in this party bus, and, you know, I'm like, no drinking. You know, no, we're not going to do any of that. It's holiday company time. Please don't do that. Well, the bus's air conditioner is out, and believe it or not, I don't know why, but we. It was hot at the time that we went. So we're driving up there, the air conditioner's out, everyone's cranky. We stop at this convenience store while they're trying to figure out what to do about the. The bus. And next thing I know, everyone's coming out with brown sacks. And I'm like, oh, boy, this is spiraling down in a hurry. Well, sure enough, there was the. The alcohol was involved then. And then we go to the restaurant, you know, and they had some there as well. We came back, and I'm telling you what. So I got a diverse team. I got people that are preachers, you know, that work for me. And then, you know, some. Some good old boys that know how to. How to have fun, you know, and party. They broke the stripper pole in the. In the party bus. That was how. How. How crazy it got. And I got back, and I'm just like, all right, check. Never do that again. That was a lesson learned.

So that's what didn't work. But Chris did also have some very successful holiday events.

We had the most fun. We did things like we went to Laser Zone and got to play, you know, laser tag with all their family and had ugly sweater things there and different events. I had Santa come in one time to all their. All their. The kids that were there last year. Even, even after I'm gone, it's cool to see they're still doing it at Hunter, but they had a full casino night where they bring in, you know, poker tables and everything. And, and the money that they won, they bid on prizes, which were tools and different things like that. So look for opportunities to. To engage not just the employee, but the families and bring them all together. I think that's. That's what makes it special, and that's what people are going to remember.

Another important thing when it comes to holiday bonuses and really just team appreciation in general is that money alone is not enough. Now, don't get me wrong, money is a very important factor, and you do have to pay people well if you expect to keep a quality team around. But you also have to make sure that every single member of that team knows that you sincerely appreciate them.

Me personally, I took great pride. I don't need. Pride's not even the right word. It was an honor for me to have a team man. So I. Every time, every time that I wrote their paychecks out, I would even write like a scripture verse on there or a thank you note, something, because it was, it was my time to thank them for all their efforts. So, same thing. Whenever it came to this Christmas bonus, we would put their money in a little thing and I would write out a handwritten note, you know, of appreciation. And you give them out and everyone goes straight to the envelope, right? You know, I mean, it's what you're there for. You're looking for the money just like a kid. You know, when you get that card from grandma, you really don't care what it says. Most of the time you're just looking for the. For the money. But then one time I went to an employee's house and it was, it was like a month or two later. And I look up on that, on his refrigerator and just like displaying like a kid that, you know, gets something awesome at school and they put it up on the refrigerator, there was that note, and I was like, hey, wow, that's. That's pretty cool. And he said, yeah. He said, honestly, Chris, that's the first time in all my years working that I think a boss has ever, you know, shown appreciation like that. And it just really meant a lot to me. So to him the money was nice, but I could tell the the appreciation that meant something to him more so than than anything else.

Anyways, that's all I got for today. Be sure to hit like if you like this video and found it valuable, be sure to subscribe to my YouTube channel. If you haven't done that already, hit that bell icon so that YouTube notifies you. Anytime I upload video a new the video, leave me a comment down below and let me know what you do for your holiday bonuses. Appreciate it. Happy Holidays. Peace.