Variable pay plans, on the other hand, are becoming more popular, as companies attempt to tie bonuses to performance. Eighty percent of employers now offer such systems, up from 59% in 1995.
Bonuses, however, are not gaining popularity. Forty-six percent of companies have never offered bonuses, and 16% have recently discontinued their programs. Of those who cancelled their programs, 54% did so in the 1990s, while 43% did so in the last four years.
The reasons for elimination are varied, with 65% saying it was because of cost, 37% claiming it was because of entitlement issues, and 28% saying it was because they developed pay-for-performance programs. Of those who have never offered such bonus systems, 40% claimed it was because of cost, 39% never had considered such a program, and 21% said that is was not consistent with their rewards philosophy.
Of those who are offering bonuses, 49% said that they will offer retailer gift certificates, 37% will award cash, and 21% said they will give employees food. They do so, according to the Hewitt survey, to say thank you (54%), maintain tradition (24%), and to boost morale (17%).
Of those offering bonuses, 85% budgeted less than 1% of their payroll expenses to such awards, while 9% budgeted between 1% and 2%. The median award for cash bonuses will be $550 per person, while the median food or certificate award will be worth $25. Variable pay programs, on the other hand, often call for nearly 10% of total payroll expenses, according to Hewitt.
Companies may not give bonuses, but most (75%) throw parties for employees. The average party will cost $20,000, with 17% paying more than that. Twenty-one percent will pay less than $5,000.
Hewitt Associates ( www.hewitt.com ) is a provider of human resources outsourcing and consulting services, working with over 2,300 companies.