Employers to Stick with Bonus Levels in 2010

March 10, 2010 (PLANSPONSOR.com) - The majority of employers report their bonus payments in 2010 will be similar to what they paid last year, according to a Buck Consultants survey released today.

The survey found 58% of organizations expect to award bonuses that are within 5% of last year’s amounts, while more than one in five respondents (21%) plans to make bonus payments that are 5% or greater than 2009 payments. Meanwhile, according to a press release, pay increases for 2010 average 2.2% – greater than last year’s average, but slightly less than the 2010 projections made by companies in a prior survey Buck conducted in July 2009.

Explaining the salary and bonus decisions, Tom Burke, director at Buck Consultants, said companies may have ended the year with earnings performance that was strong enough to meet or exceed their targets, but the targets may have been at levels that were the same as, or even less than, prior targets; companies may be rewarding those employees – especially top performers – who made it through downsizing and have been asked to do more; and companies may be more inclined to award bonuses, which are variable costs, rather than to increase base salaries, which drive up fixed costs and benefits that are tied to salaries.

The survey also found one-third of respondents report making changes to the way they measure or reward the performance of their employees. Thirty percent indicate they plan to use market-based salary adjustments to retain their top performers.

More than 95% of respondents say they have no plans to expand or implement bonuses for attracting and retaining employees, despite widespread reports about growing worker dissatisfaction.

The survey, “Recovery, Restoration and Retention: 2010 Compensation Trends,” was completed in January 2010 among 180 employers, representing virtually every sector of the U.S. economy.