Astronology®: 2020 Compensation Budgeting Forecast Part 2: Incentives, Bonuses, and Variable Compensation

Astron Solutions

The design and implementation of variable compensation programs continue to grow throughout 2019 and it appears that this trend will continue into 2020. WorldatWork found that 84 percent of surveyed organizations used variable pay as part of their compensation program in 2019.

Compensation Cafe: The Contradiction of Annual Incentives

RecognizeThis!

Incentives are only effective when they match the timeframes of employees’ motivation to perform. In light of a recent Willis Towers Watson report on the ineffectiveness of annual incentives, I wanted to take a closer look at how and why they motivate employee behavior. By Derek Irvine.

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Compensation Cafe: Employee Engagement and Incentives Compensation

RecognizeThis!

Last week on Compensation Cafe I blogged: “Is Employee Engagement Moot in Today’s High Stress Work Environments?” Bonus & Incentives Employee Engagement Social Recognition Strategic Recognition & Company Values WorkHuman compensation cafe incentives recognition

Astron’s Yearly Compensation Review Part II: Incentives, Bonuses, and Variable Compensation – Oh Boy!

Astron Solutions

As Astron’s clients begin their 2019 compensation program budgeting, we are often asked whether or not the practice of providing variable compensation will grow, shrink, or remain about the same as in 2018. employers gave out performance-based bonuses. Photo by Lukas from Pexels.

Variable Pay: Is There a Difference Between a Bonus and an Incentive?

Compensation Today

PayScale’s 2017 Compensation Best Practices Report (CBPR) revealed that nearly three-quarters of organizations give some type of variable pay. Is there a difference between a bonus and an incentive? Bonus” falls under the umbrella. Incentive” also falls under the umbrella.

What Incentives Can Do, What Incentives Cannot

Compensation Force

Incentive compensation. Incentives are dangerous, and not just because people game them. Incentives are like that jet engine. Yet incentives are still the first resort of most managers, perhaps because they all think they’re smart enough to create the perfect carrot.

The Dark Side of Incentives

Compensation Cafe

When describing their annual incentive plan (STI) most organizations will highlight to eligible employees the upside reward opportunities provided by the plan. But there’s usually less talk about what happens when times are tough, as incentive communication tends to focus on the positive.

Do You Know What A Bonus Is?

TLNT: The Business of HR

I’m reminded again, via many conversations with employees and managers, of the wide range of definitions people hold for some very basic compensation terms. Bonuses Compensation & Benefits Incentives Pay for Performance Pay Increases & Raises Wages, Pay, & Salary Featured

Incentives and The Rule of Three

Compensation Cafe

Designing an effective incentive plan is always a challenge. Over many years I have come to rely on what I call the Incentive Plan Rule of Three. No more than three metrics (KPI), no more than three defined goal levels, no more than three incentive plans for any one individual.

Key Factors to Manage Employee Merit, Bonus & Incentive Plans Effectively

HRsoft

There are many ways to incentive performance in an organization. Typically grouped together under the umbrella term “pay for performance plans,” employers may choose among merit programs, bonus options, and individual or team incentive plans. In order to manage employee merit, bonus, and incentive plans effectively, however, it’s important to first understand the key differences among these types of pay.

Is Your Annual Bonus Guaranteed?

Compensation Cafe

When worried organizations consider methods to get their arms around (control) high payroll expenses, they typically turn a blind eye to the variable pay component, to annual bonuses or incentives. Just be careful not to over-compensate the incentive payments to make up any loss.

Woulda, Coulda, Shoulda: An Incentive Compensation Story

Compensation Cafe

Inside that company, worked a compensation professional (“Yolanda”) who juggled many projects. Not the least of them was the creation, design and management of the company’s long-term incentive program. This year the two main incentive plans did not perform as expected.

Compensation Dentistry (part 1)

Compensation Cafe

Compensation programs can often be the same. Annual and long-term incentive plans are often not as well cared for. It is the rare compensation professional who gets excited about these impending issues. Yes, incentive plans can be harder than base pay.

Compensation Cafe: Promotions, Bonuses, Raises, Recognition – When They Work (and When They Don’t)

RecognizeThis!

You can’t give all employees promotions, bonuses, or raises. My post this week on Compensation Cafe was triggered by it being “the season of giving.” ” Many companies distribute annual bonuses around the holidays, leading me to ponder the best time and use for bonuses as well as the other major reward methods of promotions, raises and, of course, recognition. Recognize This! - They become an expectation and it’s a very poor use of budget.

2018 Compensation Budgeting Forecast Part 2: Trends in Incentive Compensation

Astron Solutions

Astron Solutions has been tracking the increase in organizations instituting short- and long-term incentive plans among our client organizations over the past year. Current Use of Bonus / Incentives. of organizations paid bonuses to their exempt employees in 2017, down from 54.3%

Learning Corner with Jeffrey Pfeffer: Less Is Better Than More When it Comes to Incentives

Cornerstone On Demand

Zimmer commented on a bonus program I had written about where each store employee (except the store manager) would receive $20 if the store met its “good" sales target for the month, and $40 if it met its “excellent" sales goal. Incentives are a poor substitute.

Incentive Compensation Management Software

HRsoft

Compensation planning on its own is a complex topic. A robust compensation framework must be internally equitable, externally competitive and compliant with pay and labor laws. Incentive compensation planning takes the concept a step further.

Another New Year- Time to Think About Bonuses

Affinity HR Group

With 2019 over and at the dawn of a new decade, it’s an ideal time to think about bonuses for 2020. Organizations of all sizes and across all industries use bonus programs as an important component of total compensation. There are many different types of bonus programs.

Using Incentive Compensation Software to Drive Performance

HRsoft

Incentive compensation is the process of paying employees based on the performance of an entity. While it is among the most effective means of driving desired outcomes in an organization, it can also lead to increasing complexity for compensation professionals.

5 Lessons from Glittery Smelly Incentive Plan Mistakes

Compensation Cafe

It turns out that incentive compensation doesn’t just work, it can work too well at motivating the wrong behaviors. Make sure you design your incentive plan to reduce the possibility and rewards for cheating. Incentive plans are difficult to get perfect.

When Incentive Pay Goes Rogue!

Compensation Cafe

A friend of mine likes to say: “It’s not that incentive pay doesn’t work well, it’s that it works TOO well. When this happens, compensation professionals usually cry foul. It usually does exactly what it is designed to do, even if that wasn’t your intent.”.

8 Ways the Minneapolis Skyway is Like Incentive Compensation

Compensation Cafe

After using the Skyway to get from my hotel to the conference site, I realized that the system was exactly like incentive compensation. Simply replace the word “Skyway” with “Incentive Plan” and you’ll easily see the lesson learned.

Should You Offer a Signing Bonus?

HR Daily Advisor

Whether you call it a hiring bonus, a signing bonus, or a sign-on bonus, the idea is the same: It’s a bonus offered to a job applicant to entice him or her to accept the position. Should You Offer a Signing Bonus? Should You Offer a Signing Bonus?

Do Your Incentive Plans Motivate Choking?

Compensation Cafe

Could it be that we are designing and communicating incentives for our highest performance all wrong? This study specifically looked at the impact of incentives on motor and neurological performance in high-pressure situations. Dan is a leading expert on equity compensation issues.

The Real Cost of Mismanaged Incentives: Wells Fargo

Compensation Cafe

Today is a steaming jolt of quadruple espresso in response to the Wells Fargo incentive pay mess. If you have been under a log for a couple of weeks, please start by reading a couple of earlier Compensation Café Articles (my own When Incentive Pay Goes Rogue!

Cafe Classic: Don't Blame Incentives

Compensation Cafe

Editor's Note: Incentives are a tool. Incentives are not the cause of bad reinforcement programs, any more than forests should be blamed for the existence of warfare. Because incentives are powerful, they should be designed and implemented with great care.

Why Today’s Incentive Thinking Is Different

Achievers

Too often in human history, this meant that people with less power were simply compelled to work, and incentives — if they existed — consisted merely of being allowed to survive. The Central Challenge of Giving Incentives. Stats That Prove the Value of Incentives.

Critical Incentive Pay Lesson from a Jeopardy Champion

Compensation Cafe

This is where we can leverage Jeopardy to improve incentive plans. Most incentive plans are very heavily weighted toward “winning.” When you have already earmarked your potential incentive compensation, this risk of losing some of it can stop you from earning all of it. Incentive plans can be designed to offer measurable value if a real effort is made even when results may not be achieved. This provides an incentive to try.

Compensation Wormhole

Compensation Cafe

This amount will also impact your future bonuses and other pay. Many of us can do a better job communicating the benefits of culture and incentive pay programs. Showing the growing value of long-term incentives can put Velcro into the seat of your employees’ pants. Time Travel.

Does Incentive Compensation Really Motivate Employees?

HRsoft

This question has sparked debate among compensation professionals for years. Incentive compensation continues to work for many organizations, but does it truly motivate employees to contribute their best efforts? Making Incentive Pay Work.

The Tricky Business of Incentive Compensation

Compensation Cafe

One solution has been to implement incentive compensation or “pay for performance” plans. Given concerns about the low performance of incentive compensation schemes, though, when and how such incentives truly motivate behavior has remained an open question.

Turtles Confirm that Incentive Pay Works!

Compensation Cafe

The discussion regarding the efficacy of incentive compensation is ongoing. We tend to think of incentives as based on job descriptions and tasks people normally perform. Instead of the incentive being pushed on recipients it was only available via request.

3 Ways to Improve This Year's Compensation Communications

Compensation Cafe

Here are three tips you can use any time during the year, but most of all during merit increase and incentive award periods. The compensation communication cycle takes many weeks -- too long to be disconnected from your audiences. Treat compensation as part of the business cycle.

Incentive Plans Work Too Well (here’s the trick)

Compensation Cafe

It's not that incentive plans don't work well, it's that they can work too well in motivating unintended consequences. Are any incentive compensation experts shocked by this? The failed Wells Fargo incentive plan and Tax Reform are similar.

Compensation Dentistry – The Orthodontist (part 3)

Compensation Cafe

They have a business plan that requires a ton of new hires and a compensation philosophy or structure designed for the company they were a year ago. The impact of poorly managed and planned compensation can include slow or difficult hiring processes and nonoptimal retention or motivation.

Compensation Cafe: Chasing Best Practices

RecognizeThis!

A recent report from PayScale, which I covered in this post on Compensation Cafe , helps to provide some useful data around compensation practices, particularly among top-performing and average companies. Bonus & Incentives Best Practices compensation performance

Incentive Pay is Like a Par 4 Golf Hole

Compensation Cafe

He is passionately committed to aligning pay with company strategy and culture and considered a leading expert on equity compensation issues. Dan has written several industry resources including a recent Performance-Based Equity Compensation issue brief.