The holidays are here again, and so is the annual rite – and delicate art – of holiday tips and bonuses. The more thought and care that a board puts into this annual gift to the building staff, the longer the gesture will be savored.
Although a tip and a bonus are very similar (both are intended to reward service), there is a subtle difference. Mary Ann Rothman, executive director of the Council of New York Cooperatives & Condominiums (CNYC), offers this definition: “Shareholders tip, boards give bonuses.”
A bonus is determined by the employer and will be treated as any other taxable income. Occasionally, it can be considered a condition of employment. On the other hand, tipping is something shareholders do at their discretion.
Budget for Bonuses
“We recommend to all our boards that they budget bonuses for end-of-year payments,” says attorney Mark Hankin, a partner at Hankin & Mazel. “This way all the shareholders are made aware by review of the budget.”
The approach is simple. Bonuses are generally organized by the board when it meets near the end of the year. “The board usually takes the step of dictating how the staff should be compensated,” says Mark B. Levine, vice president of Excel Bradshaw Management Group. “Management is there to offer constructive criticism on [a staff member’s] job performance this year, compared to the others, and [help] the board make an informed decision.”
Merit Counts – Or Doesn’t
The amount of the bonus is generally based upon merit, but not always. “For some boards, it’s a matter of business, not dependent on performance in any way; it can be classified as an extension of the employees’ salary for the year,” says Levine. “Others will critique the employee’s year with a performance review and will craft a bonus on the outcome of that review. There is no perfect science for this.”
Increasingly, money for holiday tips and bonuses comes from the main operating account, and should be distributed through the payroll. “The days of cash payments are gone,” says Hankin.
When deciding on the amount of the tip or bonus, annual reviews are standard operating procedure. Michael Berenson, president of Akam Associates, says his company “provides the board with written management evaluations of each staff member’s performance over the past year to assist in their decision-making.”
Levine agrees. “The management company will usually remind them of the upcoming holiday season, show the history of the building’s compensation, and then discuss with the board their procedure for the current year.”
In most buildings, supers, porters, doormen, and other staff members receive two different sources of extra income at the holidays: a year-end bonus from the co-op or condo and cash tips from individual residents.
“Everyone needs to remember that there are very divergent economic situations in our city and often within the same building,” says Rothman, of the CNYC. “It’s all about what [residents] have and can afford.” Some people don’t have a lot of money to spare, so they give a small tip. “Encourage the staff not to be too judgmental over what they receive,” she adds.
Some boards organize a pool for the building and assign “floor captains,” or a similar ad-hoc position, to solicit from shareholders/unit-owners and residents, collect funds, and distribute them to staff according to a pre-determined formula, according to Berenson. “In some cases, this pool is for all building employees, except the superintendent or resident manager,” he says. “This is done in order to ensure that all building workers receive some gift from the building at the end of the year.”
“Many people like the idea of the money being pooled and the staff receiving lump sums that way; some buildings include a Christmas bonus, or holiday bonus, in their budget for staff,” says Rothman. “That certainly isn’t a union requirement.”
Other buildings, such as those managed by Akam, publish the names, positions, and tenures of building staff, along with a color photo of each employee, for distribution to shareholders or unit-owners in November. This allows residents to put names to faces and give their own individual holiday tips at year-end.
When buildings distribute lists of their employees, it subtly encourages residents to recognize good service they have received in the course of the year. Moreover, people become more aware of the less visible staffers who clean at night or run the service elevator, and are no less deserving of thanks.
The board may want to use this holiday gift-giving as a way to build community spirit. Berenson explains that Akam hosts year-end parties for the staff of each of its co-ops/condos. In some, but not all, cases, the tips and bonuses are presented there, rewarding staff for a year’s worth of hard work.
“In buildings where all staff members are receiving a year-end tip or bonus from the building as a whole, the envelopes may be distributed at these parties,” he explains. “Where not every building staff member is receiving a tip, distribution obviously needs to be more discreet.”
It Helps You Too
Tipping is part of an unwritten social contract, Berenson notes. “It is more or less expected that appreciation for services rendered will be expressed in a holiday gift.”
Above all, the act of giving is important when attempting to retain good personnel. “Remember, most of the employees are union-based in residential buildings,” says Hankin, the attorney. “Their pay is set by a collective bargaining agreement. During that three-year period they know exactly how much compensation they will receive, and it’s the same at any union building they work at. So, bonuses are attractive to them and give them incentive to continue to do a great job for the cooperative or condominium.”
Indeed: the holiday tip or bonus may be the gift that keeps on giving.
– by Tom Soter/Interviews by Emilie Ruscoe