Is “Annual Incentive” a Contradiction in Terms?

Compensation Cafe

In the best cases, these schemes are designed to differentiate among performance levels, rewarding effort and results with annual merit pay increases and other annual incentives. The results from a recent Willis Towers Watson survey suggest only 20% of organizations find that merit pay is an effective driver of individual performance, while 50% say the same of their annual incentive programs. There is a design element to explaining the ineffectiveness of annual incentives.

The Tricky Business of Incentive Compensation

Compensation Cafe

One solution has been to implement incentive compensation or “pay for performance” plans. For adherents, incentives can motivate managers to engage in behaviors that are slightly outside the scope of their everyday role and tackle risks that are more directly aimed at improving performance. Given concerns about the low performance of incentive compensation schemes, though, when and how such incentives truly motivate behavior has remained an open question.

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Promotions, Bonuses, Raises, Recognition - When They Work (and When They Don't)

Compensation Cafe

You can’t give all employees promotions, bonuses, or raises. Bonuses. Bonuses are a deeply embedded part of the compensation plan in many companies – especially at this time of year. The structures of bonus plans are too numerous to detail in a short blog post, but they are generally viewed as an additional means of compensation, often tied to some kind of achievement metric (company, team or individual results or outcomes, usually).

Cafe Classic: Competition Is Good, Except When It’s Not - The Difference between Incentives and Recognition

Compensation Cafe

Editor's Note: Incentives and Recognition are key elements of a total reward portfolio, but they work in different ways and are better suited to different purposes. I’m often asked, “What’s the difference between incentives and recognition? Incentives and recognition are two distinctly different mechanisms that can be used to boost employee productivity, but each has its proper place and time for use. The Difference between Incentives and Recognition.

Cafe Classic: Is Pay a Critical Part of Culture or Not?

Compensation Cafe

Explanation 3: In the context of this question, employees interpret pay less in terms of fixed salary or hourly wage and more to do with incentives, bonuses and recognition.

Cafe Classic: Empowerment is Great, But Make Sure You Have These Things First

Compensation Cafe

As structure is removed, companies need to make sure that elements are in place to continue supporting employee performance, things like culture, recognition, and aligned incentives. Here’s how a combination of culture and incentives might have helped.

Cafe Classic: 3 Tips to Increase Intrinsic Motivation with Recognition and Rewards

Compensation Cafe

Our esteemed editor, Ann Bares, wrote recently on what incentives can and cannot do. In “expected tangible” rewards (if/then incentives rewards, where the reward is known before the task is completed). This is the major caution with incentives programs.

Why Potential Rewards Matter More at Work than Fear of Punishment

Compensation Cafe

On the other hand, expectation of reward (promotion, recognition, bonus) triggers a response deep in the mid-brain to take action, to advance. As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition , leading workshops, strategy meetings and industry sessions around the world.

3 Reasons Why Metrics Go Wrong

Compensation Cafe

As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition , leading workshops, strategy meetings and industry sessions around the world. Incentives/Bonuses Pay for Performance Performance ManagementA business mantra for decades has been “what gets measured gets managed.”

Cafe Classic: Choosing the Right Currency for Compensation & Rewards

Compensation Cafe

Commenting on a “survey” of preferred rewards by sales pros, the blog author Ley Borlo shared a couple of examples of sales rep reactions to questions about incentives programs. A Vast Selection of Rewards Works Better than One Incentive Goal. Base Salaries Incentives/Bonuses Pay for Performance Recognition Total RewardsEditor's Note: Cash is king, goes the old saying. Is it really true? Derek Irvine goes after this Classic assumption head on. .

Including Meaningful Work in the Total Rewards Package

Compensation Cafe

Simply put, no matter how much cash employees receive (in a mix of base pay and bonus), it’s never enough. Bonuses given once a year spike an employee’s engagement and experience level for 4-6 weeks, then that becomes the new normal. A far better approach would be to take a small percentage of the bonus investment, break it up, and give it throughout the year in the form of recognition and rewards that can’t disappear in a paycheck but can fund a guilt-free reward experience.

Using the Corporate Tax Break to Your Best People Advantage

Compensation Cafe

To date, more than 260 companies have announced one-time bonuses for employees out of the expected return. A one-time bonus has a one-time impact. Leaders would be far better served to take that bonus allocation (or even a portion of it) and implement it throughout the year, decoupling the bonus from a tax benefit and realigning it to much more strongly convey the meaning and impact of the individual’s regular and ongoing contributions to the organization’s success.

Why Wait? Timely Rewards Deliver Increased Intrinsic Motivation

Compensation Cafe

How does this impact the way we think about total rewards in an annual (or even quarterly) bonus structure? Perhaps it’s time to rethink the annual bonus, redistributing that rewards budget for far more frequent and timely recognition and rewards given throughout the year. How important a role does the annual bonus play in your total rewards strategy? Incentives/Bonuses Total Rewards

4 Keys to Leadership According to Jack Welch

Compensation Cafe

You need to love to give bonuses. Above-and-beyond bonuses available to any level of employee. As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition , leading workshops, strategy meetings and industry sessions around the world. “Neutron Jack” Welch is back in the news.

Why Appreciating the Labor of Others Matters

Compensation Cafe

Material incentives like bonuses…quickly lose their punch… When you rely on “stuff” to feel satisfied, you have to keep upping the ante because whatever you get becomes the baseline. Incentives/Bonuses RecognitionThe American holiday of Labor Day fascinates me. I greatly appreciate the concept of pausing for a day to celebrate both the people who labor as well as the fruits of their work.

3 Innovative Compensation Ideas Ready for Prime Time

Compensation Cafe

As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition , leading workshops, strategy meetings and industry sessions around the world. Compensation Philosophy Incentives/Bonuses Pay for Performance Recognition

Living Wage vs. Pay for Performance

Compensation Cafe

Yet in some industries, especially those where labor is perceived as a cost and not an asset, more emphasis is put on incentives or bonus in a pay-for-performance model targeted to the higher order needs before fulfilling the base pay requirements for achieving the security of the foundational needs. The bonus, however, would put a numerical value on something that wasn’t countable to begin with: your commitment. Compensation Philosophy Incentives/Bonuses Pay for Performanc

When Irrational Humans Make Good Decisions

Compensation Cafe

Lalin Anik, Lara Aknin, Michael Norton, Elizabeth Dunn, and Jordi Quoidbach conducted a series of field experiments in which they found that when employees share their bonuses with coworkers and charities, they are more satisfied and perform at a higher level than those who don’t. We are happier and perform better when we’re able to give our hard-earned bonuses away. Incentives/Bonuses RecognitionNews flash. Humans aren’t rational.

Cafe Classic: Celebrating Success. Who Do You Reward?

Compensation Cafe

As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition , leading workshops, strategy meetings and industry sessions around the world. Compensation Philosophy Incentives/Bonuses Pay for Performance Recognition

Cafe Classic: Balancing Process and Outcomes – How “Silo” Thinking Can End Up Rewarding the Wrong Thing

Compensation Cafe

As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition , leading workshops, strategy meetings and industry sessions around the world. Incentives/Bonuses Pay for Performance Recognition Total RewardsEditor's Note: Balance is a fundamental concept in the design of rewards.

Cafe Classic: Unions, Recognition and Employee Engagement

Compensation Cafe

Ann Bares, our editor here on Compensation Café , recently wrote on her Compensation Force blog about Union Employees & Variable Pay , citing recent Hewitt research showing that “13% of union employees working at the 130 organizations covered by the study are participating in a variable pay (incentive) plan.". Incentives/Bonuses Pay for Performance Recognition

Where Have All the Raises Gone?

Compensation Cafe

Last month The New York Times ran an article bemoaning the loss of pay raises in favor of one-time bonuses and non-monetary rewards. Aon Hewitt did not even start tracking short-term rewards and bonuses — known as variable compensation — until 1988, when they accounted for an average of 3.9 Compensation Philosophy Incentives/Bonuses Recognition Total Rewards

Will Keeping SCORE Help You Keep Top Employees?

Compensation Cafe

Since in this author’s structure, recognition and incentives are included in compensation, this is particularly true. As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition , leading workshops, strategy meetings and industry sessions around the world.

Fair Pay, Differentiated Rewards

Compensation Cafe

Trying to work within existing merit structures, Jules noted: “Paying fairly means you acknowledge the contributions of your star peformers who went above and beyond hit stretch goals by giving h(im/er) more merit/bonus and not giving merit/bonus to the slackers.”. Compensation Philosophy Incentives/Bonuses RecognitionMy last post was a bit provocative – or at least the title was: “An Argument for Unfair Pay.”

The Business Case for Employee Recognition and Rewards

Compensation Cafe

In short, the report references three primary alternative rewards methods companies are relying on more and more instead of the typical broad-based salary increase: Performance-related bonuses, in the vein of standard performance-based pay practices with tiers of bonus based on performance ranking. And performance-related bonuses tend to focus only on the full picture, eliminating the opportunity for lower performers to receive appropriate rewards when they do exceed expectations.

1% of Payroll: The Magic Number For Social Recognition Investment

WorkHuman

Finding 3 in the 2016 SHRM/Globoforce Employee Recognition Survey shows that the sweet spot for values-based rewards and recognition investment is 1% or more of payroll. To learn more about investing in recognition, we sat down with Chris French, Globoforce’s VP of customer success, for a Facebook Live chat. The annual pay raise or bonus for example, only gives a lift in employee engagement for about one month. Check out the e-books Annual Bonus, Annual Waste?

The Recognition Science Denier

WorkHuman

Below is a clip about the Deniers from Globoforce CEO Eric Mosley’s keynote at WorkHuman 2017. At WorkHuman 2016, a group of 30 Globoforce customers corroborated with the WorkHuman Research Institute and Shawn Achor , WorkHuman speaker and Harvard researcher, to examine the impact of their recognition programs on talent outcomes like turnover and performance. Say Goodbye to the Annual Bonus.

Faith, Trust, and Pixie Dust at Total Rewards

WorkHuman

Speaking on a panel with three other Globoforce customers titled, “Slicing Up the Total Rewards Pie to Deliver Stronger ROI,” Burgess told the audience that the key to building a great culture comes down to, “Faith, trust, and a little bit of pixie dust.”. On average, women’s bonuses are 56% that of men’s bonuses. What’s especially alarming about this research is it shows bonus pay can become a huge liability and risk for businesses.

Chasing Best Practices

Compensation Cafe

It turns out that high performers are more likely to provide pay increases (90% compared to 84%), bonuses (81% compared to 74%), and are also likely to leverage more of a compensation mix. At first glance, companies that want to achieve better performance may be well advised to adopt some of these practices, and start distributing more increases and bonuses as well as explain the reasons for those investments.

Recognition & Inclusion

Unipos

Traditional forms of recognition come from the top-down , whereby a manager directly offers words of praise, accolades, rewards or bonuses to their employee. This can take on the form of 1:1 feedback loops, yearly or quarterly bonuses, performance reviews, employee of the month or years of service awards and more. Additionally, these one-off spikes don’t provide enough incentive to impact employees’ daily motivation levels significantly. SHRM/Globoforce Survey.

Talent and HR News Weekly Update: Employee Recognition Trends

exaqueo

2) 4 Meaningful Ways to Recognize Exceptional Employees from Customer Think During this holiday season, many managers are grappling with annual performance reviews, year-end bonuses, and planning for 2017. According to a global survey of more than 1,000 executives, non-financial incentives can be a more effective motivator than financial incentives. The impact of financial incentives is often short-lived.

Using Performance Feedback to Calculate Pay?

Impraise

Awarding higher pay and bonuses to top performers seems like the straightforward way to incentivize and retain great employees. The most popular format being performance based bonuses, which keep base pay manageable and provide incentives for better performance. Traditionally money was seen as the main incentive used to motivate employees. Higher productivity results in higher salaries and bonuses. A joint study by SHRM and Globoforce found: “Peer-to-peer is 35.7%

A Comprehensive Guide to Total Rewards (And How to Master It)

Vantage Circle

It includes the money paid to employees in wages, salaries, bonuses, perks, and other intangible benefits. A total rewards program gives employees a complete package of benefits, rewards, and incentives. Examples of extrinsic rewards include pay, bonuses, incentives, and gift cards.

Healthcare HR and Employee Retention: 6 Key Factors to Consider

Precheck

Benefits can be leveraged to help with common recruiting strategies, including increasing retention efforts, expanding training programs to help improve skills of new hires, using/enhancing an employee referral program, offering more flexible work arrangements, providing monetary incentives to candidates (e.g., signing bonus) and offering new job perks,” the report s states. Healthcare HR and Employee Retention: 6 Key Factors to Consider Nov. 29, 2017. Antique-Nguyen.jpg.

Is Pay a Critical Part of Culture or Not?

Compensation Cafe

Explanation 3: In the context of this question, employees interpret pay less in terms of fixed salary or hourly wage and more to do with incentives, bonuses and recognition. Typically, the statistics we read about in workplace surveys are intuitive. They fit with our basic understanding of how organizations work, or at the very least could work better. That wasn’t the case with one of the findings from a recent report from The Workforce Institute at Kronos and WorkplaceTrends.com.