Bonus Binge: Variable Pay Outpaces Salary

With salary increase budgets expected to remain at 3 percent for 2017, employers are turning to variable pay to reward employee performance.

The percentage of organizations using variable pay vehicles, such as annual or quarterly bonuses based on individual, team and organizational goal achievement, rose to 84 percent in 2016, reports WorldatWork, an organization of total rewards professionals, in its 2016-2017 Salary Budget Survey. This number had been hovering around 80 percent for many years.

The August report reflects the results of a survey of WorldatWork members, most of whom work at large North American companies. Survey data was collected through May.

A combination of awards based on individual, business unit and organizational performance continues to be the most prevalent type of variable pay program.

Types of variable pay programs:
The percentage of respondents who indicated that their organization uses all three (combination), or just one or two, of these awards; some employers offer multiple variable pay programs covering different employee groups:

Combination of awards based on both organization/ unit success and individual performance

70%

Organizationwide awards

28%

Individual incentive awards

23%

Unit/strategic business unit awards

17%


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