A survey of 400 of the Fortune 1000 companies indicates that they are putting more emphasis on at-risk pay and less on base compensation. This includes the adoption of so-called alternative pay strategies such as "broadbanding" (the enlargement of pay ranges into broad bands, reducing the number of pay levels) or "gainsharing" (a program designed to improve productivity or reduce costs and share the value of any productivity gains or cost savings with employees).
How are salary increases delivered to employees?
| |
Executives |
Exempt employees |
Nonexempt employees |
| Merit-based only |
94.8% |
95.4% |
89.6% |
| General, across-the-board only |
0.5 |
0.5 |
2.3 |
| Combination of merit and general |
4.7 |
4.1 |
8.1 |
| Total |
100.0% |
100.0% |
100.0% | |
Companies that offer employees formal bonus plans.
| |
Executives |
Exempt employees |
Nonexempt employees |
| 1997 |
91.0% |
73.3% |
39.5% |
| 1996 |
91.4 |
64.0 |
33.9 |
| 1995 |
88.7 |
59.4 |
27.4 |
Bonuses paid in 1997 as a percentage of salary to nonsales employees.
| |
Executives |
Exempt employees |
Nonexempt employees |
| Average |
38.7% |
14.4% |
5.6% |
| Minimum |
20.8 |
9.0 |
4.1 |
| Maximum |
67.6 |
28.0 |
10.9 |
| Budget target |
35.9 |
13.3 |
5.4 | |
| Alternative Pay Strategies |
The incentive program most used by survey respondents was lump-sum merit increases—delivered in the form of a single cash payment—to reward individuals who are at the top of their salary range without altering the salary structure. What other alternative strategies are companies using?
| |
Now using |
In process of implementing |
Considering |
Not considering |
| Broadbanding |
25.1% |
4.7% |
21.6% |
48.5% |
| Competency based pay |
7.1 |
2.7 |
33.8 |
56.3 |
| Gainsharing |
16.3 |
1.4 |
10.5 |
71.9 |
| Group incentives |
28.3 |
2.5 |
21.1 |
48.1 |
| Skill-based pay |
12.0 |
1.1 |
17.9 |
68.9 |
| Team-based pay |
13.2 |
2.0 |
24.2 |
60.7 | |
Source: 1997/1998 Compensation Budget Survey of Fortune 1000 Companies ,
Buck Consultants, Secaucus, New Jersey.
©1998 AICPA