LINCOLNSHIRE, Ill. – After months of belt tightening and bad news around the current economy, employers are doing their best to bring holiday cheer to their employees this season. According to a new survey from Hewitt Associates, a global human resources consulting and outsourcing company, most companies will continue to provide employees with holiday bonuses this year, although the value may be slightly lower than in the past.

Hewitt's 2008 holiday survey of more than 160 organizations reveals that of the 42 percent of companies offering holiday bonuses, this year more than half (52 percent) will provide them in the form of cash—spending an average of $863 per employee. Forty-two percent will give gift cards or gift certificates averaging $76 per person, and 16 percent will give food (e.g., ham or turkey). Most employers that provide holiday bonuses do so to show their appreciation (57 percent), for goodwill or morale (18 percent), to maintain tradition (12 percent), and/or as an incentive for employees to improve business results (8 percent).

"In the current economic climate, it seems to defy logic that more companies are offering holiday bonuses," said Ken Abosch, North American compensation practice leader at Hewitt Associates. "However, with so many companies struggling, employee morale is down across the board. Employers that can manage are paying out some type of holiday bonus this year in order to recognize and thank employees for their hard work."

Holiday Parties Also Continue

Beyond holiday bonuses and gifts, most employers (71 percent) will also continue to throw holiday parties this year as a way to recognize and say thank you to hard-working employees. Of these, 22 percent will spend $5,000 or less on their parties, 19 percent will pay between $5,000 and $10,000 and 20 percent will spend between $10,000 and $25,000.

According to the survey, 51 percent hold parties after work hours, 62 percent host them at off-site locations and half allow employees to bring significant others. On average, 69 percent of employees attend their company's holiday party.

Variable Pay Continues to be Primary Reward for Employees

While holiday bonuses continue to be a way for companies to express thanks and appreciation, most employers are continuing to focus on variable pay programs—performance-based rewards that must be re-earned each year—as the main vehicles for rewarding and compensating employees. According to Hewitt research, 90 percent of employers currently offer at least one variable pay program compared to 72 percent in 1998.

As variable pay programs become increasingly popular, it accounts for a bigger piece of employees' overall compensation package, particularly as base pay rates continue to steadily decline. According to recent Hewitt research, average pay raises are expected to increase just 3.0 percent in 2009, down from 3.7 percent in 2008. Average spending on variable pay as a percent of payroll is expected to be 11.5 percent in 2009. 

"Over the past decade, we've seen holiday bonuses transform from a main rewards vehicle into something that's more of a 'token of appreciation,'" explained Abosch. "Today, more and more companies are tying incentives directly to performance in order to give employees a vested interest in the success or failure of the company and to take away the entitlement mentality that comes with bonuses that are given arbitrarily. This is particularly true in tough economic times, where higher productivity and performance have a direct impact on bottom-line business results. In today's world, employees who are top performers will be the ones best rewarded."

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.

Maurissa Kanter

,  Hewitt Associates,  (847) 883-1000

MacKenzie Lucas

,  Hewitt Associates,  (847) 883-1000