LINCOLNSHIRE, Ill. – Most U.S. employees hoping to get a holiday bonus to supplement the small pay raises they saw this year may be disappointed. A new survey from Hewitt Associates, a global human resources consulting and outsourcing company, shows the number of companies offering traditional holiday bonuses in 2009 are at record lows. While the current economy has accelerated the decrease, Hewitt's research shows a steady trend away from these bonuses toward the adoption of more formal pay for performance programs to reward and thank employees.

Hewitt's annual Holiday Bonus survey of more than 300 companies shows that less than a quarter (24 percent) are offering holiday bonuses this year, down significantly from 42 percent in 2008. Of those giving bonuses, nearly half (49 percent) will give cash, spending a median of $250 per employee. Thirty-nine percent will give gift cards, with a median value of $35 per employee, and 22 percent will give food (e.g., turkey or ham).

Replacing holiday bonuses are variable pay programs, which have increasingly emerged as the primary pay for performance vehicle for employers and make up a greater portion of an employee's overall compensation package. According to Hewitt research, average employer spending on variable pay as a percent of payroll has steadily increased over the past decade, from 9.7 percent in 2000 to 11.2 percent in 2010. On the other hand, average pay raises have been steadily decreasing. In 2000, average salary increases were 4.3 percent compared to just 1.8 percent, in 2009.

"Holiday bonuses have been falling out of favor in recent years as companies face increased pressure to reduce costs and are more focused on growth and performance," said Ken Abosch, head of Hewitt's North American Broad-Based Compensation Consulting practice. "Instead of giving arbitrary, across-the-board bonuses, employers want to find ways to appropriately reward their highest performing employees. And they are doing this by reserving more of their compensation budgets for bonuses that are based on performance and must be re-earned each year."

Companies Hosting Holiday Parties Down Slightly
In addition to cutting back on holiday bonuses, fewer employers will host holiday parties this year. According to Hewitt's survey, 60 percent will fund holiday parties, down from 71 percent in 2008. Of those that do host holiday parties, the median amount organizations plan to spend is $15,000, down from $19,000 in 2008.

Aside from smaller budgets, most employees can expect to see parties similar to years past. A little more than half (51 percent) will hold parties after work hours and 61 percent plan to host them at off-site locations. Fifty-five percent plan to allow employees to bring significant others.

About Hewitt Associates For more than 65 years, Hewitt Associates (NYSE: HEW) has provided clients with best-in-class human resources consulting and outsourcing services.  Hewitt consults with more than 3,000 large and mid-size companies around the globe to develop and implement HR business strategies covering retirement, financial and health management; compensation and total rewards; and performance, talent and change management.  As a market leader in benefits administration, Hewitt delivers health care and retirement programs to millions of participants and retirees, on behalf of more than 300 organizations worldwide.  In addition, more than 30 clients rely on Hewitt to provide a broader range of human resources business process outsourcing services to nearly a million client employees.  Located in 33 countries, Hewitt employs approximately 23,000 associates. For more information, please visit www.hewitt.com.