Aug. 23, 2016 — WASHINGTON, D.C. — More than 9 in 10 companies have a written or an unwritten compensation policy, but fewer than half of surveyed companies believe their employees understand it, according to new research released today from WorldatWork and underwritten by Aon Hewitt. The new study, Survey on Compensation Programs and Practices, also closely examines salary administration and compensation trends.
"With pay transparency in the news, it is surprising to see the large percentage of companies whose employees are either not familiar with their organizationâs compensation policy or have minimal understanding of it," commented Kerry Chou, CCP, senior practice leader. "This new survey also looks at the amount of communication coming from organizations to employees and found it to be decreasing. This might be in response to the mistaken belief that with little change in salary increase budgets, additional communication is unnecessary."
The survey also reported a decreasing number of organizations using a formalized merit matrix or employee ranking to determine base salary increases. 13% of organizations reported that no guidance is provided other than the overall budget figure â a sharp increase from 1% in 2014. Additionally, 44% of respondents said their organization publishes a merit matrix that managers can use as a guide, but individual managers also have the choice to deviate from the matrix.
From 2010 to 2016, the number of organizations using bonuses increased from 59% to 81%, reflecting a shift in variable pay programs. Meanwhile, the number of employers using individual incentives (other than sales) dropped during the same time period, from 67% in 2010 to 39% in 2016.
"The number of incentive plans with a portion based on individual objectives is going down; one reason may be that those kinds of programs are labor intensive between tracking goals and their results. Add potential individual-manager biases into the mix, and the effort may not be worth the resources it takes to execute," Chou added.
Additional Findings Include:
About the Survey:
In May 2016 WorldatWork invited a sample of its members to participate in the "Survey on Compensation Programs and Practices." The survey invitations were sent electronically to 5,404 U.S. and international WorldatWork members. The survey closed on June 3, 2016, with 660 responses, a 12% response rate. The dataset was cleaned and analyzed using statistical software. WorldatWork conducted similar compensation practices surveys in 2014, 2012, 2010, and 2003.
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