Benefits: The Nanny’s Perspective On Year End Bonuses

It’s that time of year again. In the past week I’ve read 8 or10 articles giving advice on the end-of-year bonus or tip for your nanny. (First thought: it’s never a good idea to use the word “tip” when talking about the person who cares for your child every day.) But the nanny bonus isn’t as simple as picking a number that seems about right, writing a check and sticking it in a card. Most employers would be surprised at how much the nanny bonus impacts the long term success of the employment relationship. Many times it’s the saving grace or the last straw in a difficult year or a strained nanny / family relationship. So let’s talk about how the nanny sees things.

It’s not about the money.

To many nannies, the end-of-year bonus is infused with all kinds of meaning and emotion. It’s how employers show they value the wonderful care the nanny provides day after day. It’s how employers say thank you for handling last minute scheduling changes, dirty dishes left in the sink or other “not in the job description” things with a smile and a positive attitude. It’s how employers show they notice and are grateful for the nanny’s flexibility, pitch-in attitude and professionalism. The end-of-year bonus is an expression of how much a nanny is loved and appreciated.

It’s all about the money.

While money isn’t the main motivator for nannies, it does matter. Even when it’s not talked about openly, a yearly bonus is an expected part of the compensation package. How much the nanny expects depends on a few different factors. Here’s a quick rundown.

Nanny’s Base Wages   The higher the wage, the higher the bonus. The industry standard is one to two weeks’ wages.

Job Description   The more difficult or extensive the job, the bigger the bonus.

Years on Job   Long-term caregivers get a heftier bonus than nannies who’ve only been with a family a year or two.

Family’s Financial Situation   Although this shouldn’t really matter, it does. If a family cuts corners to pay their nanny a competitive wage, the nanny is happy with a modest bonus. However if a family spends generously on other things, the nanny expects her bonus to be in line with that level of spending. In other words, if the family regularly spends $350 on a Friday night out with the kids, a $500 end-of-year bonus won’t make the nanny very happy.

Why is this such a loaded issue?

The problem with the typical end-of-year nanny bonus is that it’s a combination of a holiday gift – something personal – and a performance based part of the compensation package – something professional. Those two things just don’t go well together. Expectations are misaligned, boundaries are blurred, and assumptions run amuck. Fortunately this is one area where you can easily separate the personal from the professional, strengthening both parts in the process.

My solution.

Instead of providing the typical end-of-year bonus, I suggest employers provide their nanny with a simple, heartfelt gift during the holidays and a performance based bonus paid on her yearly anniversary.

The gift, maybe a gift card to a favorite store or a handmade keepsake crafted by your child, is a great way to show your nanny how much she means to your family on a personal level. It’s the perfect way to celebrate the holidays with her.

The bonus, tied directly to her performance, is a great way to show her how she’s doing professionally. This process of review and reward gives you the opportunity to update your job description as your child’s and family’s needs change, pinpoint areas that need improvement, showcase accomplishments and talk about goals for the upcoming year (i.e. potty training, letter recognition, learning to swim). A performance based bonus gives your nanny a sense of professional identity and pride, something that’s often missing in our informal industry. All these things help keep your employment relationship on the right track.

Adding in long-term bonuses (i.e. an additional amount at 3, 7, and 10 years) sends a clear message to your nanny that you value longevity and gives your nanny a financial incentive for staying year after year. My clients often add long-term bonuses to their custom contracts and have found them to be very helpful in keeping a great caregiver over the long haul. Of course if your nanny’s used to getting her bonus at the end of the calendar year, you’ll need to give her a heads up before changing the payment day to her nanniversary. If she’s planning to use the money for an immediate need, you might need to put the structure in place starting in 2015.

I encourage you to look at the bigger picture when deciding on your nanny’s bonus this year.  With a little planning, it can be both a great perk for her and a great tool for you.