Fewer companies giving holiday bonuses

By Karen Dybis
Detroit News

A shrinking number of companies will provide holiday bonuses to their employees this year, and some executives are trimming or eliminating gifts to their staffs due to the company's performance or a lagging local economy.

Economists say the decline in bonus pay is a sign of the times.

Nearly two-thirds of all U.S. companies say they will not give cash or gifts to their workers to celebrate the holidays, according to a recent study by Hewitt Associates, a global human-resources services firm in Lincolnshire, Ill.

Most businesses have found over the past four years that the bottom line has shrunk, and so have bonus programs, said Walter Kiwala, an economist and professor at Strayer University in Richmond, Va.

"Businesses are stressed. There's heightened global competition. Corporate profits have declined. There have been reductions in the workforce, particularly among middle managers, just to remain competitive," Kiwala said.

"As long as you are reasonably profitable, you can afford to do something like that. But as the belt is tightening and global competition is increasing, something has to go by the wayside."

Ken Abosch, a business leader for Hewitt Associates, said holiday bonuses have been declining for the past decade. Of those businesses that ended their bonus programs recently, 65 percent cited cost as the primary factor.

"Companies are under severe pressure to manage their costs better. Even though they're not spending huge sums of money on these holiday bonuses, every dollar counts in this environment," Abosch said.

Detroit-based Comerica Inc. no longer gives holiday bonuses and has not done so for several years, said Comerica spokesman Scott Talley. The bank does provide one-time cash or stock incentives to employees who have gone beyond company standards or generated new revenue, he added.

Of those companies that will offer a holiday bonus program this year, nearly half will provide store gift cards, 37 percent will award cash and 21 percent will give a food gift, Hewitt's study showed.

However, dentists Jeffrey Haddad and Kurt Doolin plan to award their staff of nine women a spa party as their Christmas bonus, with peppermint pedicures and Swedish massages.

Their team of dental hygienists and assistants are the backbone of their practice, Haddad said.

"Most of these women have worked for us for many years. We would hate to see any of them go," Haddad said. "You're only as strong as the people around you."