If you decide to give out end of year bonuses to your staff, here are several things you’ll have to decide:
- What kind of bonus will it be? Is it simply a Christmas bonus? Or is it an end-of-year performance based bonus? The Christmas bonus is given simply because it’s Christmas and you want to be generous. The performance based bonus is determined by…you guessed it…how well that staff member did their job that year. I don’t think one is necessarily better than the other. But you have to pick which you’ll do.
- Will everyone get the same amount or will you reward some more than others? I personally do not believe in giving everyone an equal amount, unless everyone performed at the same level. If word ever got out that your top performers got the same amount as everyone else, this would discourage them. You want to generously reward what you want repeated so give your top performers more than everyone else – even if you choose to do a Christmas bonus vs a performance based bonus.
- When will you give them out? Some churches intentionally do not give out bonuses before Christmas so that no one ever begins to depend on the church to provide presents at Christmas. Other churches do the exact opposite – choosing to give bonuses before Christmas for the very purpose of helping staff pay for Christmas. I’ve done it both ways and in my experience, your staff will appreciate it more right before Christmas.
- Where do you budget for bonuses? I believe the best place to budget for bonuses is right within the Personnel section of your budget. Plan for their base pay, their health insurance, their retirement benefit and for an annual bonus. If you don’t budget it, you may not have the surplus you need at the end of the year to cover bonuses – and then you risk disappointing and demotivating your team. I know that in an ideal world, no one would be disappointed because after all, bonuses are not promised and shouldn’t be expected. However, we live in the real world, and in the real world the way it works is that if you gave out bonuses last year, your staff will expect them again this year. I say you should budget for them so you can consistently give them out, without missing on certain years.
- How much will you give? I know of some churches that give out up to 5% of a staff member’s base salary. In this scenario the staff earns 1% or 5% (or somewhere in between) based on their performance. I know of other churches that give out 1% of a staff member’s base salary on the first year of employment and then increase the bonus by 0.2% each additional year they stay on staff. I personally prefer the latter. I think it’s simpler and more scalable (for when your church has lots and lots of staff). With that said, if you budget for it, you’ll be able to execute either option to scale.
- How will you deliver it? One year I wrote a check and put it in a card but since I didn’t go through payroll I left a burden on each staff to figure out how much needed to come out for taxes. Bad idea. So the next year I had it go through payroll and when each person received their normal pay, the bonus was added to that amount. Doing it this way, payroll took care of any taxes automatically, but it was very anti-climatic. Most staff have their pay auto deposited into their checking account so it was as if they never really received anything extra. It just wasn’t the same as handing them something. Another bad idea on my part. This year I tried something I’ve very happy with. I went through payroll again so that staff wouldn’t have to worry about the tax burden of the bonus, but unlike last year, I had payroll mail me individual checks for each person. I then folded each check and put it inside a little thank you note I hand wrote for each person. It had the wow factor I was looking for.
Why even do bonuses? Do bonuses have a place in the church, like they do in corporate America? Here’s my take on it: God so loved the world that He gave… (John 3:16). God is a generous God and we are made in His image and likeness (Genesis 1:26). I feel we best reflect the character and nature of God when we are generous. And giving out a bonus, especially during the Christmas season, is a great way to practice biblical generosity.