Very few PRO members can be called Scrooges. However, every November-without fail-conversation turns to the issue of the Christmas bonus. Most PRO members are happy to share the wealth, but they're not at all happy with traditional Christmas bonuses. Why? Because an employee who receives annual Christmas bonuses comes to consider it part of his salary. He sees it as his due, and it goes largely unappreciated. That's why many PRO members have shifted away from the Christmas bonus and towards an incentive-based bonus. A Christmas bonus doesn't spur performance…an incentive bonus does. And, really, isn't that the purpose of any reward system? Ah, but shifting away from the revered Christmas bonus is a delicate business. Here are some tips for making a successful transition: Design a viable incentive plan that includes individual employee objectives and concrete performance measurements. Introduce your incentive plan at the beginning of a new year-never in October or November! You want your employees to view this as an improvement, not a takeaway. Be sure to position it as such. Plan to pay bonuses more than once a year-perhaps biannually or quarterly. For one thing, it lets employees know how they're doing and allows them to adjust their performance along the way. For another, it keeps employee motivation high, because the next payout is never out of view. And last of all, it may prevent your employees from going into debt, hoping their year-end bonus will bail them out. Do you find yourself resisting this idea? Remember, you are not taking anything away. If the incentive system works, it may actually end up costing you more. Investing in your company's future-and making tough financial decisions-is essential to your long-term survival. Don't think merely in terms of this year and next year. Look further down the road. Benevolent dictator types are comfortable with the Christmas bonus because it keeps them in control. However, you can structure an incentive-based system in a way that keeps you in the driver's seat. For example, base 70 to 80 percent of the employee's bonus on measurable performance goals, and reserve 20 to 30 percent for management discretion. That gives you room to address intangibles that fall outside of the written criteria. PRO member Bob, who owns a woodworking company, was very apprehensive when he replaced his traditional Christmas bonus with an incentive-based system. To his amazement, he found that his employees preferred being rewarded for their achievements. Since implementing the incentive bonus, he has virtually eliminated turnover-and that's a bonus he didn't foresee! An important footnote: if you have a bad year and suspect there will be no bonus or very small ones, it's critical to start communicating it early on and to provide details so people understand the reasons. Otherwise, morale will plummet when your employees learn the bad news.