Boosting Profitability: The Secret to Persuading Your Boss to Amp Up the Holiday Party Budget
A simple explanation that your boss will appreciate. Profits. A high employee turnover rate is a massive expense for any business. Finding ways to boost employee retention can have a positive impact on the profitability of the company. Employee parties can help create a positive and engaging work culture. Lack of employee recognition is one of the leading indicators of employee turnover. The annual holiday dinner or party is an excellent opportunity to publicly recognize employees while increasing corporate profitability by reducing salary expenses thanks to higher employee retention rates, increasing productivity, and improving work culture. Another benefit all bosses will appreciate is that several expenses related to the company holiday party are tax-deductible. Four essential reasons to increase this year's holiday party budget that your boss will appreciate:
- Improve Work Culture and Increase Profits
- Improve Retention Rates and Increase Profits
- Improve Productivity and Increase Profits
- Take Advantage of the Tax Benefits Allowed for Company Holiday Parties
Improve Work Culture and Increase Profits
A new study of employee recognition by OGO found that 92% of employees are more likely to repeat a particular action after receiving an acknowledgment of their efforts. Employee recognition efforts that include gifts and parties can significantly improve work culture by fostering a more positive, motivated, and engaged environment by:
- Boosting morale
- Enhancing motivation
- Promoting a sense of belonging
- Encouraging employee engagement
- Improving team collaboration
- Reducing turnover
- Reinforcing company culture and values
- Enhancing employee loyalty
- Boosting employee well-being
- Encouraging innovation
When selecting recognition gifts for holiday parties, it is essential to remember that a personalized, thoughtful gift will have a more significant impact on work culture than mass-produced items. Personalized or engraved holiday employee appreciation gifts are an excellent way to show company appreciation and improve work culture.
Improve Retention Rates and Increase Profits
According to Deloitte's 2020 Talent Survey, recognition is one of the top three reasons employees stay with a firm year after year. Not only are employees happier and more engaged, but as little as a 15% increase in employee engagement can result in a 2% increase in margins. In fact, according to Jeffrey Fermin of the Huffington Post, up to 50% of employees who do not feel valued by their bosses intend to leave within a year. After adjusting for inflation, the average worker who changed employment between April 2021 and March 2022 had an increase in earnings of almost 10% over the previous year, according to the Pew Research Center. Whereas the average employee who stayed in their current position saw their wages decline by almost 2% after inflation. Therefore, employers can expect to pay roughly 10% more when hiring new employees.
High employee turnover rates can be costly for a company in several ways. On average, it costs 33% of the employee's base salary, leaving to replace them, around $15,000 in the United States. Some of the costs associated with high employee turnover rates:
- Recruitment costs
- Onboarding and training
- Productivity loss
- Knowledge and skills loss
- Customer impact
- Team disruption
- Overtime and burnout
- Hiring Mistakes
- Exit costs
Reducing turnover saves money and helps maintain a stable and productive workforce.
Improve Productivity and Increase Profits
An astounding 40% of working Americans would put more effort into their work if they received recognition for their hard work regularly, according to a survey conducted by OGO (O Great One!). Deloitte's 2020 Talent Survey confirms OGO's results with their findings: employee productivity, engagement, and performance are 14% greater in companies with consistent recognition strategies than in those without. In addition, they discovered that 40% of companies do not link employee recognition with company objectives. Consequently, this is a missed opportunity for many companies since humans (yes, your employees are human) naturally align their behavior to receive recognition.
Take Advantage of the Tax Benefits Allowed for Company Holiday Parties
Finally, take advantage of the tax breaks available for workplace holiday parties by spending extra on recognition presents that employees will appreciate. As of January 2023, tax deductions for food and entertainment company costs reverted to pre-COVID levels. Meal expenses for the Christmas party are 100% deductible as long as the function is "primarily" for the benefit of the employees.
As with all tax deductions, keeping thorough records of all holiday meal costs is crucial, ideally billed separately from those for the venue and entertainment. The date of the dinner, the venue, the reason for the dinner, the names and positions of those present, and the total bill, including tax and tip, should all be noted in the records. (PBMares CPAs and Consultants) Disclaimer: Nothing in this post should be construed as legal, business, or tax advice; it is solely intended for informational purposes. Regarding your particular circumstances, please speak with your accountant or bookkeeper for more details. (Publication 463, Travel, Entertainment, Gift, and Car Expenses)
In conclusion, persuading your boss to spend more on the company holiday party this year can have far-reaching benefits that your boss will undoubtedly appreciate. By allocating a more substantial budget for the holiday party, you are not just hosting a fun event but making a strategic investment in your company's future success. Invest in your employees, and your company will reap the rewards.
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