Q: Should I pay bonuses to my employees and contractors during the holidays? Times are tight, but I don’t want to be a Scrooge.
— Cash-strapped entrepreneur
A: Dear Cash-Strapped:
The holiday season can be fulfilling emotionally but draining financially, that’s for sure. You may be facing a year-end cash slump or big expenses. Or, you may have a bunch of cash on hand and be facing a big tax bill.
Assessing the reality of your current situation is the starting place. Many people believe they are cash-strapped, when really they aren’t and could actually make better decisions with the resources they do have. You may want to contact us for a resource mining session to identify what you do have and how you can use your resources in the best way possible.
Regarding holiday bonuses for team members, we do not recommend it. Instead, get your team members a thoughtful gift that is within your budget based on the resources you have and the end of year tax planning you are doing.
When you give holiday bonuses, they become expected rather than earned. And, if you don’t give them one year because you really are cash-strapped, feelings can be hurt. Rather, structure your compensation plan so that your team is bonused based on measurable objectives, all year long. A Family Business Lawyer™ can help you with that, when you are ready.