Use of Short-Term Incentives Up

By SHRM Online staff November 9, 2012

While employees may not see much improvement in base pay next year, the prevalence and size of short-term incentives has increased substantially, according to the Buck Consultants' sixth annual Compensation Planning Survey.

The September 2012 survey analyzed responses from more than 350 U.S. organizations to determine trends in compensation for 2013.

The median salary increase in 2013 will be 3 percent, as employers continue to be cautious with their salary budgets. Buck Consultants predicts that the new normal for salary increases will settle at this 3 percent level.

The expected size of short-term incentive awards forecast for 2013 is greater than the target payouts for 2012 and actual payouts in 2011 for all employee groups except CEOs. Employers see a bonus or other short-term incentive—a one-time expense as opposed to the annual expense of a salary increase—as a cost-effective approach for rewarding employees.

Among other findings:

Hiring and retention bonuses were offered by more than half of the organizations surveyed (56 percent).

Referral bonuses also were offered by 56 percent of organizations.

The prevalence of ongoing long-term incentives depends on employee level. For example, stock options were offered to CEOs by 52 percent of survey respondents but only offered to rank and file exempt employees by 29 percent.

“The results of this survey are similar to past years in terms of compensation—slow growth, lots of challenges and not a lot of money to spend,” said David Van De Voort, principal, Buck Consultants. “However, we’ve moved past the environment of several years ago when employers were freezing pay and reducing 401(k) matches.”

Related SHRM Articles:

Salary Outlook Brightens—Slightly—in 2013, SHRM Online Benefits Topics, September 2012

Spending on Performance-Based Awards Stays Strong, SHRM Online Compensation Discipline, August 2012

Unanimity on 2013 Salary Forecasts Holding Up, SHRM Online Compensation Discipline, August 2012

Quick Links:

SHRM Online Compensation Page

SHRM Salary Survey Directory

SHRM Compensation Data Center

SHRM Metro Economic Outlook reports

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