March 2000

Executive Summary

As hiring concerns continue to soar, Human Resource management is challenged to retain current key employees. To ease the revolving door syndrome, companies are identifying positions where turnover would be a hardship to the organization. Many are also implementing retention programs for critical project completion and longevity awards.

A recent e-mail survey conducted by WorldatWork queried more than 650 members regarding their cash retention bonus programs. Many participants said they are considering implementing more retention programs beyond the Y2K IT bonus. A significant number of companies specified use of a retention bonus while going through mergers, acquisitions and closures to ease them through the transition period. The survey also revealed:

• 24% of the participants currently have Retention Bonus programs in place. That number rose to almost 30% when excluding the Clerical and Other Staff categories.
• 25% of those having programs tied the bonus pay out to a project completion.
• 75% of the surveyed companies paid bonuses in a lump sum cash award.
• 35% of the participants calculated the retention bonus as a percent of base pay.
• On average, 30% of the companies paid an actual dollar amount of more than10% of the employees base salary.

Question 1. Does your company award cash retention bonuses to the following categories of employees:
	Yes	No
Upper Mgmt.	28%	72%
Middle Mgmt.	29%	71%
Supervisors	22%	78%
Professional Staff	32%	68%
Technical Staff	35%	65%
Clerical Staff	10%	90%
Other Staff	11%	89%
Average	24%	76%
Click here to see a breakdown by company size.
Question 2. Is the cash retention bonus tied to length of service?
	Yes	No
Upper Mgmt.	11%	89%
Middle Mgmt.	14%	86%
Supervisors	10%	90%
Professional Staff	15%	85%
Technical Staff	18%	82%
Clerical Staff	6%	94%
Other Staff	7%	93%
Average	12%	88%
Click here to see a breakdown by company size.
Question 3. At what point does the cash retention bonus pay out?
	1 Year or <	After Year 1	Project Completion	Other Milestone	Other
Upper Mgmt.	14%	15%	19%	12%	41%
Middle Mgmt.	17%	14%	24%	15%	30%
Supervisors	15%	10%	28%	13%	34%
Professional Staff	16%	14%	28%	10%	32%
Technical Staff	15%	10%	34%	11%	30%
Clerical Staff	14%	10%	20%	10%	46%
Other Staff	13%	12%	22%	13%	40%
Average	15%	12%	25%	12%	36%
Click here to see a breakdown by company size.
Question 4. What type of payment method is used for the cash retention bonus?
	Lump sum	Increase to base	Combination	Other
Upper Mgmt	73%	5%	11%	12%
Middle Mgmt	77%	3%	12%	8%
Supervisors	77%	4%	10%	8%
Professional Staff	77%	5%	11%	7%
Technical Staff	80%	5%	9%	6%
Clerical Staff	72%	6%	4%	18%
Other Staff	71%	7%	7%	15%
Average	75%	5%	9%	11%
Click here to see a breakdown by company size.
Question 5. When the cash retention bonus is calculated, what is it based on?
	Flat Dollar Amount	% of base pay	Combination
Upper Mgmt.	41%	34%	25%
Middle Mgmt.	41%	34%	25%
Supervisors	41%	36%	23%
Professional Staff	48%	32%	21%
Technical Staff	47%	33%	21%
Clerical Staff	37%	36%	27%
Other Staff	39%	39%	22%
Average	42%	35%	23%
Click here to see a breakdown by company size.
Question 6. What is the actual dollar amount, on average, as a percent of base pay?
	Cannot reconcile	0-5.99%	6%-10%	More than 10%
Upper Mgmt.	36%	4%	17%	44%
Middle Mgmt.	34%	6%	28%	32%
Supervisors	34%	12%	25%	28%
Professional Staff	39%	14%	24%	24%
Technical Staff	37%	10%	24%	30%
Clerical Staff	42%	12%	22%	24%
Other Staff	45%	14%	16%	25%
Average	38%	10%	22%	30%
Click here to see a breakdown by company size.