Money, money, money. It’s part of what makes the holiday season so challenging and fraught with anxiety for so many people — small business owners and restaurateurs especially. Even if you’ve just had the best year of business yet, profit margins are small and the coming months are looking unpredictable.
And then there’s bonuses.
A tried and true convention for businesses large and small, the employee holiday bonus is especially difficult for a lot of restaurant owners to wrap their hands around. Odds are, your staff will be wondering, so you’re better off starting the decision process now with a few key questions.
What kind of bonus should I give?
There are essentially three types of bonuses most businesses — restaurants included — offer its employees, more often than not at year’s end or around the holidays.
This type of bonus has been very common in the past because until recently, employees would often remain at the same company or employer for upwards of 10, 20, 30 years or more. But rewarding staff for simply sticking it out for a large number of years isn’t necessarily getting to the root of what a good employee is.
Are they contributing more than their more recently hired peers? Do they have more responsibility or skill by virtue of their length of service? Basing your bonus structure on longevity also may back you into a corner by implying a bonus is a foregone conclusion, no matter how business or staff performance shook out in the past year.
Businesses with formal, annual review processes often opt for a performance-based bonus that gets distributed whenever those reviews are completed. These are generally not seen as holiday bonuses, as the spirit of Christmas, Hanukkah, and other year-end holidays tends to be giving for giving’s sake. If your restaurant does have a performance-based bonus system in place, it’s entirely fair to skip a cash holiday bonus (although giving both would of course be thoughtful and generous, even if the latter were minuscule by comparison).
This is the most often used structure of holiday bonuses — cash or a gift given simply as a thank you to your employees, and not tied to either longevity or performance. As an acknowledgement for collective hard work, a non-performance-based holiday bonus is a reward for the entire team, and leaves the specter of performance, discipline, and employment record out of the way of holiday cheer and the spirit of teamwork.
How much is enough?
There is no hard and fast rule for how big a holiday bonus should be. What restaurateurs give their staff varies widely depends on the size and health of the business as a whole. Generally, you will have two choices: a flat rate (which can still be gradated based on longevity or seniority) or prorated as a percentage of salary size. For example, if a busperson with a $20,000 income receives $100 (.5%), a manager with a $60,000 salary would get a $300 bonus, if prorated.
No matter what you give, make sure that everyone on your staff from the bottom to the top of the employee ladder receives something, with some consideration for fairness and equity. There’s nothing worse than watching everyone else walk out the door during the holidays with a smile on their face and a spring in their step while you have empty pockets.
When should I give it?
This is entirely up to you. But the earlier you distribute the bonus, the more useful it can be to your staff, particularly if they struggle to provide gifts for their families at holiday time. Plus, there’s lots of ways to get into the holiday spirit, but receiving a bonus certainly is in the top 5 for motivating a down staff in a busy year to make it through a few rough shifts. Spreading that cheer early could mean big things for your staff’s motivation for the month.
If your business has a large number of Jewish employees, keep an eye on where Hanukkah falls in relation to Christmas. And if you have a number of employees not working over the holidays (either on vacation or otherwise indisposed) making sure they have access to the bonus before the actual holiday they observe is a thoughtful thing to do.
What if I can’t afford bonuses?
In reality, every restaurateur needs to ask themselves this question, and there are two possible answers.
1. You can, but you have other priorities.
Maybe you have spending priorities that preclude a bonus — an expansion, redecorating, new equipment. Here’s why you might reconsider in the short term:
“A Christmas bonus during these difficult times is worth its weight in gold to you.” says Art Jacoby, a business growth advisor. “A small amount of economic thoughtfulness when the chips are down will build extra loyalty and be remembered and appreciated for years. Anybody can be thoughtful when things are going well. It takes a special leader to be thoughtful even when it’s tough to be.”
Employees remember generosity more than you might imagine. It can subconsciously affect their job morale, even if they truly do understand the economic circumstances that may preclude a bonus. Really think about the value of what you’re trading off if you decide to put that little bit of extra money somewhere else.
2. You really, really can’t.
Sometimes, you just don’t have the funds, especially if business hasn’t grown as much as you’d like this year. But here are some things you can do in lieu of a money bonus:
- Give gift cards to your own establishment for free meals that will cover your employee AND their family (or a few friends).
- Trade gift cards with another local business that’s struggling to offer bonuses. You can give theirs to your employees and they can give yours to theirs.
- Provide a token gift, like a large turkey or ham, to help alleviate grocery costs for your employees for the holidays.
- Offer a paid day off that can be used in the coming year.
- If all else fails, put together a fun holiday party, so you can take the opportunity to tell your team how much you appreciate them, no matter how tough times are.
If you’ve given a bonus for many years running, and don’t think it’s in the cards this year, best to get out in front of it with your employees. You may not realize how many on your staff expect and rely upon that extra money at holiday time, even if it is technically a “bonus.”
It’s not easy to be the bearer of bad news, but your employees are more likely to appreciate you being upfront about it rather than putting off the inevitable. Set expectations as early as possible if you know this year’s profits are too lean to provide that extra burst of holiday spending cash.
If your cash flow is looking to take a nose dive this fall, check out our free eBook “What’s Eating at Your Restaurant Cash Flow (and What You Can Do About It)” today for tips on how to make ends meet: