Rewards Professionals Paying Keen Attention to Compensation and Performance Management Programs in the Face of an Evolving Workforce

Compensation programs hold steady, while traditional performance management programs experience statistically significant drops in use

February 27, 2018

Feb. 27, 2018 — Scottsdale, Ariz. — Millennials, gig workers and employees who are increasingly demanding pay fairness and transparency are posing a new breed of challenges for human resources and total rewards professionals.

The “Inventory of Total Rewards Programs & Practices” survey, conducted by WorldatWork with underwriting support from Korn Ferry, reported that regardless of this changing work environment, today’s professionals are keeping some tried-and-true compensation practices at hand.

94% of responding organizations reported offering performance-based pay increases (i.e., merit increases) to their employees. This compares to 95% in the 2016 survey, reflecting a continued reliance on job performance as a key metric when delivering pay increases.

“There is no slowdown in the use of performance-based increases. Organizations continue to tie rewards to individual contribution and organizational metrics,” said Alison Avalos, CCP, GRP, Director of Research and Certification for WorldatWork. “Employers just aren’t willing to pay out limited bonus and merit dollars when it’s based on something other than performance that leads to business success.”

“We continue to see a strong focus on performance-based rewards; however, the nuance we are seeing now is that more companies are interested in rewarding not just the ‘what’ of performance, but also the ‘how,’” said Maryam Morse, senior client partner and leader of Korn Ferry’s Rewards & Benefits practice in North America. “Employees who have an enterprise mindset when it comes to success and embrace organizational culture and values are increasingly critical to organizational success.”

And while employers continue to rely more heavily on paying out for performance, the way performance is measured is changing, according to the report. Ninety-one percent of respondents still rely on formal performance appraisals/reviews, a statistically significant drop from 94% in 2016. And 80% of respondents are using formal performance ratings in 2017, also a statistically significant drop from 85% in 2016, reflecting an increased use of ratingless reviews.

“This move away from some of the more traditional elements of performance management is consistent with the expectations we had going into the survey,” Avalos said. “There’s been a lot of buzz about organizations moving to nontraditional programs, and while they aren’t abandoning traditional performance management systems entirely, there is evidence that they are looking at emerging practices and implementing individual components of cutting-edge programs. What we’re seeing this year is that continued shift toward potentially more effective ways of driving and assessing performance”

Fifty percent of respondents said their organizations are performing more frequent performance check-ins, compared to 42% in 2016. And, though a minimal increase, 16% of organizations reported relying more on crowdsourced feedback (compared to 15% in 2016).

“We know that two of the key things that drive satisfaction for Millennials are clarity and feedback — this trend of more frequent performance discussions and organizations’ interest in embedding feedback into their organizational infrastructure shows that companies are acting on the needs of this generation,” Morse added.

Though organizations are looking at emerging practices and implementing components of cutting-edge programs, they aren’t quite abandoning tradition. 50% of respondents said their organizations are performing more frequent performance check-ins, compared to 42% in 2016. And, though a minimal increase, 16% of organizations are relying more on crowdsourced feedback (compared to 15% in 2016).

Other highlights from the survey:

  • Telemedicine Services. Rising from 49% in 2016 to 73% in 2017, Avalos said this dramatic increase is likely due to employers’ efforts to help manage increasing health-care costs and offer a broader (yet still cost effective) array of services to employees.
  • Behavioral Health Plans (Not EAP) and Employee Assistance Programs (EAPs). The percent of employers offering behavioral health plans not affiliated with an employee assistance program also increased significantly, from 78% in 2016 to 94% in 2017. At the same time, use of EAPs also saw a jump, from 80% to 96% year over year. This focus on mental and emotional support indicates employers’ increasing interest in overall employee well-being.
  • Cost-of-Living Adjustments and Retention Bonuses. The number of organizations paying out cost-of-living adjustments (COLAs) is decreasing, with just 16% of organizations reporting that they would pay out this type of increase compared to 21% of organizations in 2016. Retention bonuses also saw a decrease in use, from 59% in 2016 to 55% in 2017.

WorldatWork’s “Inventory of Total Rewards Programs & Practices” survey reflects responses from 867 WorldatWork members collected in August 2017. The demographics of the survey sample and its respondents are similar to the WorldatWork membership as a whole. The typical WorldatWork member works at the managerial level or higher in the headquarters of a large company in North America.


About WorldatWork
WorldatWork (worldatwork.org) is the leading nonprofit professional association in compensation and total rewards. We serve those who design and deliver total rewards programs to cultivate engaged, effective workforces that power thriving organizations. We accomplish this through education and certification; idea exchange; knowledge creation; information sharing; research; advocacy; and affiliation and networking. Founded in the United States in 1955, today WorldatWork serves total rewards professionals throughout the world working in organizations of all sizes and structures.

About Korn Ferry
Korn Ferry is a global organizational consulting firm. We help companies design their organization — the structure, the roles and responsibilities, as well as how they compensate, develop and motivate their people. As importantly, we help organizations select and hire the talent they need to execute their strategy. Our approximately 7,000 colleagues serve clients in more than 50 countries.

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