E-pinions

Pay for Performance—What’s Happening in the Trenches

By Stephen D. Bruce, PHR
Editor, HR Daily Advisor

Just My E-pinion

Pay for performance—everyone wants on the bandwagon, but what are companies actually doing? Our survey results tell the tale.

Most respondents provide some type of individual performance pay to all employees, according to BLR’s recent survey of Pay for Performance practices. This was true at all role levels: executive, middle management, professional, exempt staff and nonexempt employee.

About half the companies said their employees believe they have sufficient impact on the performance factors that influence their performance pay. Also, about half believe that their employees are pleased with their performance compensation program.

The survey, which garnered 560 responses, was conducted by BLR’s HR Daily Advisor in April, 2011. Participants were likely to be from the manufacturing and construction or services and trade areas. They were primarily private companies, representing a good mix of company sizes and a wide geographical distribution.

Thanks to all who participated! Here are the results:

Please note: The first set of responses relates to perceptions about individual performance compensation; the second set of responses relates to perceptions about group or team performance compensation.


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Types of Individual Performance Compensation in Use:

Executives

 
Number
Percent
Merit Plan
275
51%
Piece Rates
4
1%
Commission
22
4%
Bonuses
301
56%
No plan for individuals
78
14%

 

Middle Management

 
Number
Percent
Merit Plan
303
56%
Piece Rates
4
1%
Commission
43
8%
Bonuses
276
51%
No plan for individuals
71
13%

 

Professional

 
Number
Percent
Merit Plan
288
53%
Piece Rates
11
2%
Commission
58
11%
Bonuses
212
39%
No plan for individuals
77
14%

 

Exempt Staff

 
Number
Percent
Merit Plan
314
58%
Piece Rates
5
1%
Commission
50
9%
Bonuses
223
41%
No plan for individuals
83
15%

 

Nonexempt Employees

 
Number
Percent
Merit Plan
316
59%
Piece Rates
17
3%
Commission
32
6%
Bonuses
195
36%
No plan for individuals
79
15%

Extent to which employees are involved in setting factors for individual performance pay:

 
Number
Percent
Employees are heavily involved
81
15%
Employees are somewhat involved
159
29%
Employees are minimally involved
129
24%
Employees are not involved
174
32%

Corporate perception: Do employees feel they have sufficient impact on individual performance factors which impact their pay:

 
Number
     Percent
Yes
260
49%
No
266
51%

Frequency with which individual pay for performance plan is aligned with organizational objectives and strategies:

 
Number
     Percent
Annually
270
51%
Every other year
12
2%
Intermittently—no set schedule
130
24%
It has never been reviewed to my knowledge
94
18%
Other
27
5%

Types of Group or Team Performance Compensation in Use:

Executives

 
Number
Percent
Merit Plan
46
10%
Piece Rates
1
0%
Commission
12
3%
Bonuses
108
25%
No plan for groups/teams
272
62%

 

Middle Management

 
Number
Percent
Merit Plan
52
12%
Piece Rates
0
0
Commission
6
1%
Bonuses
90
20%
No plan for groups/teams
290
66%

 

Professional

 
Number
Percent
Merit Plan
288
65%
Piece Rates
11
3%
Commission
58
13%
Bonuses
212
48%
No plan for groups/teams
77
18%

 

Exempt Staff

 
Number
Percent
Merit Plan
314
71%
Piece Rates
5
1%
Commission
50
11%
Bonuses
223
51%
No plan for groups/teams
83
19%

 

Nonexempt Employees

 
Number
Percent
Merit Plan
316
72%
Piece Rates
17
4%
Commission
32
7%
Bonuses
195
44%
No plan for groups/teams
79
18%


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Extent to which employees are involved in setting factors for Group/Team performance pay:

 
Number
Percent
Employees are heavily involved
30
8%
Employees are somewhat involved
47
13%
Employees are minimally involved
66
18%
Employees are not involved
230
62%

Corporate perception: Do employees feel they have sufficient impact on Group/Team performance factors which impact their pay:

 
Number
Percent
Yes
121
35%
No
221
65%

Corporate perception: Are employees pleased with the Group/Team pay for performance program?

 
Number
Percent
Yes
137
41%
No
200
59%

Frequency with which Group/Team pay for performance plan is aligned with organizational objectives and strategies:

 
Number
Percent
Annually
44
41%
Every other year
6
2%
Intermittently—no set schedule
47
14%
It has never been reviewed to my knowledge
104
30%
Other
47
14%

Again, thanks to all who participated. What should we survey next? Please share your comments below.

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