Many workers will be saying goodbye to their year-end bonuses this year in another sign of the shifting power dynamics between employers and employees as companies look for ways to tighten their belts heading into 2024.
The number of companies opting out of holiday bonuses this year has reached its highest level since before the pandemic, according to a recent survey from Challenger, Gray & Christmas, a firm that advises employers on layoffs. Of the more than 200 U.S. companies surveyed, 34% say they would not be giving out the extra money to employees this year. That’s the highest number since 36% decided against bonuses in 2019, and notably higher compared to last year, when 27% of companies surveyed opted out of the practice.
Some companies will be increasing bonuses, but they number fewer—around 9%, up from 4% of companies in 2022. Of the companies that are still giving out bonuses, many are giving less. Roughly 15% of those surveyed say they are lowering the amount of their bonuses this year, compared to 11% of companies that said the same thing last year. And 24% of all the companies surveyed plan to give nonmonetary awards.
“As companies enter 2024, they are doing away with the small tokens of appreciation in favor of saving money during a time of perceived economic softness,” Andrew Challenger, senior vice president at Challenger, Gray & Christmas, wrote in a statement.
In recent years, companies have invested in a number of employee benefits, including wages and bonuses, wellness benefits, DEI and other culture programs, and office perks. During the Great Resignation when the labor market ceded more power to workers, the idea was for companies to do what they could to hold on to talent.
More recently, however, many organizations have come to think of their workforces as bloated, and they’re looking to cut their spending. Add to that a murky economic outlook for the new year, and companies are looking to save money where they can.
Spotify and Hasbro recently laid off employees, both cutting roughly 20% of their staff just before the holidays. And tech companies in particular suffered major layoffs this year, with Meta declaring it the “year of efficiency.”
Around 20% of the companies surveyed by Challenger, Gray & Christmas report they’re cutting costs, and 12% say they’re gearing up for a hiring slowdown in the new year, up from 9% of companies who said the same last year.
Stephan Scholl, CEO of benefits and human resource service provider Alight Solutions, recently told Fortune he expects to see a lot more companies doing away with wage increases, with only the highest performing employees likely to get raises.
“There’s not one CEO I’ve talked to who isn’t looking at taking costs down across services,” he says.
Those thoughts echo Challenger’s own assessment of the current business landscape.
“With companies slower to hire and workers more likely to stay in their jobs, companies are cutting where they can,” Challenger says in a statement. “Attracting and retaining workers is not as high a priority as it was in 2021 and 2022.”
