Bonuses are becoming more widely used
There is a continuing rise in companies using bonuses and other forms of variable pay to reward high performing individuals and business units. For the fourth consecutive year, the use of variable pay is on the rise. Seventy-seven percent (77%) of organizations now integrate variable compensation into their employee pay packages, up from 66% in 2001, according to the WorldatWork. In the 1990s, employees in only approximately one-third of all companies were eligible for bonuses of some kind. In those companies that do now offer variable pay, about 3 of 4 employees actually received such compensation last year.
The expanded use of bonuses is here to stay. Says Bill Coleman, senior vice president of compensation at Salary.com, "there is going to be less focus on salaries in the future, and it's unlikely we will see raises like we used to unless there's massive inflation. More likely, salaries will continue to increase just one or two ticks above inflation." The trend toward bonuses is an outgrowth from the recent years of economic uncertainty and weakness, as variable compensation is an effective way for an employer to have a lower fixed component of its personnel budget. Average incentive budgets for non-executives range from about 4.5% to 12.5%.
Certainly, the amounts granted vary widely by company and are generally dictated by business results. It is expected that companies will work extra hard to find some money this year for bonuses since they've had to do so much penny pinching in recent years. Companies are well aware that employees are beginning to get restless and as the economy and job market are improving, dissatisfied employees now do have an alternative-finding another job.
:)
Regards
Raj
From India
2There is a continuing rise in companies using bonuses and other forms of variable pay to reward high performing individuals and business units. For the fourth consecutive year, the use of variable pay is on the rise. Seventy-seven percent (77%) of organizations now integrate variable compensation into their employee pay packages, up from 66% in 2001, according to the WorldatWork. In the 1990s, employees in only approximately one-third of all companies were eligible for bonuses of some kind. In those companies that do now offer variable pay, about 3 of 4 employees actually received such compensation last year.
The expanded use of bonuses is here to stay. Says Bill Coleman, senior vice president of compensation at Salary.com, "there is going to be less focus on salaries in the future, and it's unlikely we will see raises like we used to unless there's massive inflation. More likely, salaries will continue to increase just one or two ticks above inflation." The trend toward bonuses is an outgrowth from the recent years of economic uncertainty and weakness, as variable compensation is an effective way for an employer to have a lower fixed component of its personnel budget. Average incentive budgets for non-executives range from about 4.5% to 12.5%.
Certainly, the amounts granted vary widely by company and are generally dictated by business results. It is expected that companies will work extra hard to find some money this year for bonuses since they've had to do so much penny pinching in recent years. Companies are well aware that employees are beginning to get restless and as the economy and job market are improving, dissatisfied employees now do have an alternative-finding another job.
:)
Regards
Raj
From India
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