Companies Still Using Retention Bonuses

June 19, 2002 ( - Money may be tight, but firms still recognize the importance of hanging on to key employees and are using bonus programs to do so, a new study shows.

The survey by WorldatWork, a compensation officials trade group, found that 34% of companies award cash-retention bonuses and 45% of those companies implemented their programs within the past 12 months.

These two numbers are identical to the 2001 survey results and higher than figures from a 2000 survey – a time in which the economy was considerably stronger.

What’s changed, according to WorldatWork researchers, is that personnel retention is now more aimed at hanging onto people during organizational restructuring, according to 58% of the sample. Some 52% of the sample also ticked off “ensuring long-term continuity” as an important goal. Researchers pointed out that corporate execs said in the 2000 survey they were more concerned with losing workers to better job offers.

More Workers Bonus Eligible

Also these days, more people are eligible for the added compensation, the latest study found. Every employee group, with the exception of IT staff, has increased in eligibility over 2001.

IT staff were eligible for retention bonuses in 73% of responding companies in 2001 and dropped to 66% this year. The greatest increase was in supervisors, increasing from 39% of companies last year to 58% in 2002.

Payout of cash retention bonuses still comes in a lump-sum payment for most companies, and in 35% of cases, the bonus sizes are mostly determined by either management discretion or, in 30% of sample companies, a percentage of base pay.

The WorldatWork survey covered 772 companies.