Pay for Performance—What’s Happening in the Trenches

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

Just My E-pinion

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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