The Best and Worst Holiday Bonuses Sometimes it's a holiday; sometimes it's hell.

It doesn't always feel better to give than receive--just ask anyone anxiously awaiting their holiday bonus. 'Tis the season to greedily hope for as many greenbacks as you can get, during a time in which entrepreneurs and managers traditionally do their best--or worst--to show employees how much they're appreciated at the company.

It doesn't sound like it should be a difficult process, does it? If your employee has performed well in his or her job this year, here's your chance to say thanks and to offer them something extra along with their December paycheck. End of discussion.

And that's where a lot of businesses get it wrong. Because the ritual of holiday bonus giving is one that should be handled very carefully and with some extra thought, says Kate Zabriskie, the founder of Business Training Works, a company that specializes in soft skills training in the workplace--skills like giving forms of gratitude to hardworking employees.

"Holiday bonuses are tricky," observes Zabriskie. "The wrong bonus sends the wrong message."

Indeed, a host of happy and horrific tales of holiday bonuses bear out her argument out. In one of the more extreme examples, Valerie Bent, 37, says a lousy bonus was all the motivation she needed to start her own company, Las Vegas-based Big Feet Pajama Co. Two years ago, while she was working at a Los Angeles-area investor relations firm she prefers not to not name, typical end-of-the-year bonuses equaled about 30 to 40 percent of an employee's annual salary, based on the business's profitability. "Therefore, it behooved us to work hard and run a tight ship," Bent says. "It was quite common to work 55- to 60-hour weeks--in fact, that was the norm."

As 2004 came to a close and the company was celebrating its most profitable period ever, Bent and the other employees eagerly awaited their bonuses (Bent was expecting something in the low five-figures). But the partners decided to use the bulk of the company's bonus fund to expand the business by opening up a posh Los Angeles office, and the employees ended up with nothing. That's right-nothing.

Bent was furious--more on the principle of the matter--and particularly felt bad for several co-workers who were living paycheck to paycheck and truly needed the money. She took the following week off, and instead of merely relaxing for the holidays, she decided to set up her own corporation. After making a million in revenue last year, she sent her two employees on a vacation to Italy as their holiday bonus. Now, she admits of the Grinch-like bonus she received, "It was the greatest thing that ever happened to me."

Nothing is Sometimes Better Than Something
But most people don't look back so fondly on their bad bonuses. Kristen Lunceford was hired right out of Arizona State University as an associate editor for two "extremely affluent regional magazines in Scottsdale, Arizona. My bosses were aloof millionaires clad in Gucci, Juicy Couture and Armani. They drove BMWs, dropped thousands of dollars on bedding for their infant son and were regulars at the finest spas and resorts the country has to offer," recalls Lunceford.

After a year of working for the publications, Lunceford was eagerly anticipating her holiday bonus. Near the end of one fine day in December, her editor-in-chief headed toward her cubicle--and handed Lunceford an oversized Hershey Kiss.

Lunceford quit shortly afterwards and now works for Academic Innovations, an education products and services company in Washington, Utah. Her new company, says Lunceford, "gives the most generous holiday and midyear bonuses, and with the monetary compensation, always comes a written statement of appreciation for the work I do. If that isn't better than a Hershey kiss, I don't know what is."

Not surprisingly, if you're a boss, that's the type of reaction you should be hoping for, says Zabriskie. "If you're going to give a bonus, think through the whole process," Zabriskie recommends. "If you give a bonus out of obligation, employees will know it. I once worked at a place that gave employees a bag of oranges and nuts each year because one of the business' sister companies was a fruit farm. Each employee had to pick up their bonus from the loading dock. Employees could not stop talking about how cheap the company was. Given how the gifts were received, the givers would have been better off giving nothing."

Which isn't to say you need to give what you don't have. Gifts that are small can be appreciated, or at least, understood for what they are. Matt Baron, a publicist for PR firm Inside Edge (www.mattbaron.com), recalls a bonus he received while working as a reporter for a suburban newspaper in the 1990s when he was in his 20s. The publication gave him a gift certificate from Kohl's department store worth about $10 or $15. "While I felt it was pretty modest, I was actually grateful," admits Baron, who recognized he was toiling in an industry that's often strapped for cash.

It's the Thought That Counts
If you're going to give your employees an inexpensive gift, there's a good argument for being clever and thoughtful about it. Two years ago, Arnie Aloff, a district manager for Alliance for Affordable Services, an insurance company in Chicago, was mentoring a dozen agents. Because he received commissions from their sales, he wanted to say thanks with a holiday bonus.

Being an independent agent himself, he didn't have an exorbitant amount of funds to spend, so he gave them an I-PASS transponder, a device that allows cars to pass through the numerous Chicago toll booths without stopping. They were $50 to purchase and came with $40 in pre-paid tolls--a practical gift for insurance agents often traveling around the city.

By putting some thought into a bonus, you can avoid a lot of problems, says Zabriskie. She recommends not giving employees anything too personal, anything that contradicts the receiver's value system (such as giving alcohol to a nondrinker), or anything that could be misinterpreted (for instance, giving a female employee a single plane ticket to a conference in Hawaii that you--her male boss--will also be attending).

Zabriskie also warns that re-gifting is a bad plan, and while that may seem obvious or unlikely, anything's possible. Zabriskie cites the example of a friend of hers who is extremely allergic to peanuts and was given a re-gifted homemade cake several years ago. She asked if it had nuts in it, the giver guessed wrong, and she spent part of the holidays in an emergency room.

Still having trouble deciding what to give? Think about giving something you'd want to receive yourself--and be fair about it. You may like one employee better than another, but don't give $10 to one and $200 to another, if they're both performing the same basic functions. If you're on the fence about what's appropriate, Zabriskie suggests using your family as an ethical barometer: Ask yourself whether your parents, siblings, spouse or children would be happy or proud that you were giving this particular gift as a bonus.

And it can't go without saying that there's one item that should never be offered as a holiday bonus: "Fruit cakes for everyone," groans Leslie Komet Ausburn, when recalling what the employees at a small south Texas TV station received as a holiday bonus. Back in 1990, Ausburn, a former TV reporter and an anchor now at a communications firm in San Antonio, was working her first job there, making $4.75 an hour, and had no benefits or 401(k) program. So a holiday bonus would have been particularly welcome. Instead, it was the perennial un-favorite that everyone enjoys complaining about. "These weren't even good ones," she laments.

If you're a business owner and wondering what to give as a bonus, remember that whatever you give, your employees are going to remember, pretty much forever. Brenda L. Sullivan, owner of BLS Communications, still talks about the time back in 1989 when she was 26, living in Tokyo with her fiancé and working as an editor in the research department of a British securities firm that was owned by a French bank. She was already getting an incredible salary as a contract worker, and near the end of her time there, she received her bonus, something employees were getting twice a year. It was June, and Sullivan was about to leave her job when they gave her one million yen, which worked out to around $7,000.

Half afraid it was a joke, and puzzled as to why she'd received it, Sullivan thanked the managing partner profusely and then asked why she'd gotten the very generous bonus. And, she added, "I'm a contract worker. I'm leaving the country--you knew that when you hired me, so you really didn't have to give me a bonus at all. I would never have known the difference."

He replied, "Your work has been exemplary. We hope that if you return to Japan, you'll consider working for us again."

Sullivan and her fiancé left the country the following month, first detouring to Hong Kong, where they spent the entire bonus on first class airfare, deluxe hotel accommodations, and a new custom-sewn business wardrobe for each of them. Because of the gesture of her previous employers, she'll always think well of them. In fact, she says, "The Hong Kong shopping spree remains a highlight of my life."

Geoff Williams, now a freelance journalist in Loveland, Ohio, remembers his worst holiday bonus: a pink slip. Three days before Christmas 1992, the business owners decided to shut down the company he was working for, and the employees weren't given any severance pay. But everyone did get a frozen turkey--their real holiday bonus--and Williams consumed his very slowly, before landing his next job several weeks later.