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by Vault Consulting Editors | December 15, 2008

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Picking up on the stream of HR-related material we've been discussing for the past few weeks, there's an interesting dialog going on in today's media. Finding ourselves in the midst of the holiday season (which, this year, coincides with a very Scrooge-like rash of layoffs, plummeting profits, yadda yadda yadda), companies are confronted with the question of how to reward employees, both in an effort to encourage productivity and salvage dumpy morale. And on top of that, they must consider how to reconcile these rewards with the layoffs many have deemed necessary to their business' survival?

Take, for example, the recent Kirkland & Ellis glamorous holiday bash (at The Plaza, no less), which seemed to ignore, or at least deflect attention away from, the thing that everyone else is constantly worrying about. Sure, it's a lovely idea, if you can afford it, but will it come at the expense of a few associates? Or annual bonuses? Or salary freezes? I would assume that more than a few lawyers worried about such things while guzzling their martinis at the bar. And while associates weren't hurling the proverbial shoe at the firm's higher-ups, there was certainly some discontent among the ranks. As one employee commented, "The sentiment here at K&E among associates is that if they are going to screw us on bonus and through this big Plaza bash, there's going to be a revolt." So much for improving morale.

HR consultancy Hewitt Associates released a study last week on this very subject, noting that despite the downturn, companies continue to offer rewards and holiday-related morale boosters. The firm's survey of over 160 companies showed that 71 percent were planning a holiday party. These parties won't necessarily follow the Kirkland model, however; 20 percent of companies said they were planning to spend $10-25,000 on their holiday party, 19 percent planned to shell out $5,000-10,000 and 22 percent said they'd be spending less than $5,000.

Rather than throwing blowout parties, Hewitt's found that the primary vehicle for employee reward these days is performance-related bonuses. According to the firm, 90 percent of employers currently offer at least one variable pay program compared to 72 percent in 1998, and performance-based compensation is becoming a greater percentage of total compensation. Forty-two percent of companies said they will provide bonuses for employees this year, although they will be of lower value than in years past. Over half of those companies will be paying bonuses in cash, while others plan to pay out in gift cards or food. After all, nothing says, "Thanks for all your hard work" like a honey-baked ham.

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Filed Under: Consulting

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