The Buzz About Holiday Bonuses

When Bernie Greenwald began presiding over the board at Hudson Manor Terrace, a 210-unit co-op in Riverdale, more than two decades ago, he recalls that holiday bonuses were handed out to the union staff without much thought. But over time, Greenwald’s personal experience working for a Fortune 500 company made him rethink the issue.

Over the years, he says, the bonus had become a kind of entitlement. Greenwald and other board members began looking at it differently, however, arguing that staff should be evaluated every year. “Have there been many complaints against them?” he asked. “Have they done their job properly?” The Hudson Manor Terrace board decided it could be more proactive with the bonus, using it to improve staff performance.

In most cases, Greenwald says, the board gave out the usual bonus of one week’s pay (more for the super), with an added approximately 10 or 20 percent for employees perceived to have gone above and beyond the call of duty. But evidence of poor performance – failing to open the door for residents, rudeness, excessive phone use – could lead to a decrease in the bonus. “We tried to...make you earn [the bonus],” says Greenwald, who retired from the board two years ago. No matter how you use them – as entitlement or inducement – end-of-the-year bonuses for building staff are the norm in most co-ops and condos, as are the tips staff members typically receive from residents. But bonus amounts are not at all uniform, varying from building to building and board to board. How do you calculate them?

A Formula

Some boards are fairly formulaic in their approach to this annual ritual, setting a baseline bonus amount for each staff position, then deciding whether to throw in a little extra for good performance, says Dawn Dickstein, the president of MD Squared Property Group. Typical jumping-off points might be one week’s pay for porters and doormen, two weeks for handymen, and four weeks for the super or resident manager. An employee who’s been around for more than a few years may receive a larger stipend. “Longevity is a really common denominator – boards tend to give more when they are more attached to the employee,” says A.J. Rexhepi, the director of operations at Century Management.

A number of property managers make sure the board is aware of the building’s past practices. “We prepare bonus sheets for the board that have the name of each employee, their start date, weekly salary, and what their bonus was for the last two years,” says Steven Greenbaum, director of property management at Mark Greenberg Real Estate.

Judgment Day

But more and more, boards are closely linking bonus amounts to employee performance. “Fifteen years ago, boards gave the bonus routinely,” Rexhepi says. “Today, I find more boards questioning the size of the bonus or even whether to give a bonus. People are more cognizant about rising salaries and rising costs and making sure that they’re getting the service that they pay for.”

Boards don’t necessarily conduct formal employee evaluations, but they generally want the bonus size to express the co-op’s level of appreciation for the employee’s service – or lack thereof. “We do see some people get very small holiday bonuses as a notification that [the board] is not happy with [their] performance,” says Greenbaum.

Others go farther to advocate for employees who they think performed especially well during the year and deserve extra recognition. “If I think that the bonus is too small, I will advise the board of what I think is appropriate, or remind them of something extra that employee did during an emergency or over a weekend,” says Richard Zurrow, CPM, senior vice president at Blue Woods Management Group.

Several other managers reported having seen bonuses of a similar size for highly prized supers. But they also cited other ways in which boards may reward a super, including granting a coveted parking spot or, in a non-union building, paying for health insurance. Rexhepi, of Century, recalls one board that offered to pay for a vacation for a super who was so dedicated to his job that he never went away. “He didn’t accept them paying for it,” Rexhepi recalls, “but he did eventually take a vacation.”

Size and Affluence Matter

Staff in larger buildings typically earn more in bonuses than staff in smaller buildings. But in New York City, building affluence is often a greater factor than size when it comes to bonuses. “I have resident managers [supers] in 9- or 12-unit luxury buildings who make just as much during the holiday season as the resident managers of a 200-unit building,” Rexhepi says. One important accounting note: no matter how big or small, all monetary bonuses to staff should go through payroll, and payroll taxes must be withheld, advises Carol Koransky, a certified public accountant and principal at WilkinGuttenplan. “They are receiving the bonus in their role as an employee – otherwise they wouldn’t be getting the money,” she says. Some boards elect to gross up the bonus amounts to cover the taxes. If the bonus is going to a contract employee, rather than a staffer, and the amount is over $600, then the board must issue a Form 1099 under federal tax laws.

In the end, boards should realize that they will get more if they are fair. While she finds that most boards appreciate their supers, management executive Dickstein believes that management should be ready to educate those boards that might not be aware of how much the super saves them. She recalls a co-op board in Queens. While its building was not high-end, the board members gave their super a bonus of more than $20,000 because they recognized how much he had saved them by doing repair work that they might otherwise have had to hire outside contractors to do.

Concludes Greenbaum: “Boards want bonuses to come with a message – if somebody really did a good job, they need to be told they did a good job.”