February 2002

With a lot of companies suffering through layoffs and having to lower their merit budgets, what has happened to the soft bonus programs that were so hot in the past few years? Are they going away with the tougher times? In a recent survey conducted by WorldatWork, 53 percent of the 332 companies responding are saying spot bonuses are still a part of their total rewards package. In addition, the spot bonus program was still a specifically budgeted item in 61 percent of the companies that report having spot bonuses.

In relation to the management of retaining human capital, two out of three companies (66 percent) feel that their spot bonus program is an effective tool. Nearly all of the companies used the bonuses for “special recognition” and “above and beyond” type of employee rewards (97 percent and 99 percent, respectively), with 75 percent of the organizations using the bonus for a “project completion” award.

Is there room for improvement in spot bonus programs? It seems so, with 42% of the respondents indicating that the amount awarded may be too low to be effective. Communication is also a factor: 36 percent of the respondents felt that there is a lack of communication to managers on the availability of the tool, a problem which hinders success.

1. Does your organization have a Spot Bonus program (cash awards only)?

Yes (If Yes, participants skipped to Question 3)	53%
No	47%

2. Is your organization currently considering implementing a Spot Bonus program?

Yes (participants skipped to submit)	20%
No (participants skipped to submit)	80%

3. To which of the following positions does your organization award Spot Bonuses? (Participants checked all that apply.)

Executive	26%
Upper Management	47%
Middle Management	77%
Supervisors	88%
Professional Staff	93%
Sales	47%
IT Staff	90%
Technical Staff	89%
Clerical Staff	91%

4.   For the positions you checked above, what changes have been made to your spot bonuses in the last 12

	Reduced use / need	Reduced $ amount	Increased use	Increased $ amount	No longer needed	No change
Executive	7%	15%	4%	4%	0%	76%
Upper Management	9%	10%	1%	6%	0%	77%
Middle Management	6%	7%	2%	5%	0%	82%
Supervisors	6%	5%	5%	5%	0%	81%
Professional Staff	7%	2%	6%	7%	0%	79%
Sales	7%	7%	6%	6%	0%	77%
IT Staff	6%	4%	5%	6%	0%	82%
Technical Staff	7%	3%	6%	6%	0%	79%
Clerical Staff	7%	3%	7%	7%	0%	77%

5. For the positions you award spot bonuses, identify the maximum level of the award:

	<$250	$250-499	$500-999	$1,000-2,499	$2,500-4,999	$5,000-7,499	$7,500-9,999	>$10,000
Executive	11%	7%	2%	7%	13%	11%	7%	41%
Upper Management	9%	4%	6%	12%	17%	13%	9%	27%
Middle Management	9%	4%	11%	20%	18%	16%	9%	10%
Supervisors	11%	5%	14%	24%	19%	13%	5%	6%
Professional Staff	11%	5%	13%	25%	19%	14%	3%	5%
Sales	12%	5%	16%	13%	18%	13%	9%	7%
IT Staff	12%	4%	15%	20%	20%	13%	4%	6%
Technical Staff	12%	7%	15%	22%	18%	12%	4%	6%
Clerical Staff	14%	7%	19%	24%	17%	7%	2%	5%

6. Does your organization award spot bonuses for any of the following reasons?

	Yes	No	N/A
Project completion	75%	18%	7%
Special recognition	97%	2%	1%
Above and beyond	95%	1%	--
Safety	29%	49%	22%
Other	29%	40%	31%

7. Is your spot bonus program a budgeted item?

Yes	61%
No	39%

8. If yes, approximately what percentage of your payroll budget is your spot bonus program?

Ranges	Percent of total
Less than 1%	40%
1-2%	31%
2-5%	11%
5-10%	4%
10%+	5%
Unknown	7%
Varies	2%

9. Do you feel that your Spot Bonus program is an effective tool in retaining key employees?

Yes (If yes, participants skipped to submit)	66%
No	34%

10. If your Spot Bonus program is not an effective tool, why not? (Participants checked all that apply.)

Amount awarded is too low	42%
Cash not available at this time	17%
Doesn't go deep enough into the organization (ex: upper management only)	3%
Lack of communication to managers about availability	36%
Managers not comfortable using	31%
Tax bonus calculation de-values the award	22%
Upper management discourages use	5%
Other	27%

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