MAKE THE HOLIDAY BONUS A REAL INCENTIVE   In these times, when every single old-fashioned management practice must be reexamined, the question arises in early December: "What about holiday bonuses?" Rest assured, your employees will appreciate holiday bonuses, even if those employees are fiercely independent free agents. From the employee’s perspective, more is always better when it comes to compensation. However, from the employer’s standpoint, there are only two good reasons to give holiday bonuses: (1) To spread holiday cheer. In this case, make the bonuses small and poignant--they are symbolic. (2) To celebrate the overall success of the company. If this is your reason, you must take a step back. Are you giving holiday bonuses in order to reward individuals for their contributions? If so, you must reward the high performers more than the average, and the average performers more than the low performers.

When planning your holiday bonuses, keep the following in mind: Control and timing are the keys to effective compensation programs. Employees must see that their individual performance is the only lever they can use to control their compensation. And significant rewards should be timed to coincide with the achievement of concrete results, not with arbitrary moments on the calendar. The last thing you want to happen is for employees to get big end-of-year bonuses--holiday or otherwise--and then leave on January 2, in the middle of a big project.

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RainmakerThinking is proud to present edited excerpts from Bruce Tulgan’s new book, Winning the Talent Wars (coming January 22, 2001 from W.W. Norton).

One question that leaders and managers are still asking is this: "How do I get people to put in their time in today’s short-term environment?" The question YOU should be asking is this: "How do I get people to deliver the results I need when I need them?"

If you are really serious about moving into the new economy and winning the talent wars, stop paying people right away. You heard me. Stop paying people and start buying their results. Bring in your purchasing agents to run seminars for the compensation team. Start reworking the compensation system, fast. Have the purchasing agents teach every supervisory manager the basics of purchasing results in the free market. To survive in the new economy, every manager is going to have to get very good at negotiating with employees as if they were outside vendors. Managers simply must start establishing clear deliverables and deadlines with every employee every step of the way, agree on fair financial and non-financial compensation for every milestone, and then start paying vendors of talent (formerly known as employees) when they deliver, and only when they deliver...

Paying people the market value of their work--whatever the market value is today--is precisely how you can get yourself and your company out of bidding contests that don’t work and into bidding contests that do... Short-term pay-for-performance contracts will be the natural culmination of the free market for talent, and therefore, the norm of employment in the new economy.  

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Cynthia Conrad, Managing Editor
E-mail: cynthiac@rainmakerthinking.com
Ph: 203.772.2002 x106		 Sixty-Third Edition, December 4, 2000
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