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We see the same trend; it's frequently more dramatic, when focused on particular occupations or jobs. The gross overview is deceptive because it encompasses situations where historical "legacy" incentive plans have increasingly been challenged even as newer more relevant plans have been rolled out. Every enterprise tends to have different trends at different times, too. Nevertheless, the oft-referenced current emphasis on P4P remain universally true, as programs that clearly support organizational survival and best reinforce key contributors are enhanced while plans that fail to meet the more stringent cost/benefit analyses of today are dropped. Money is tight and can't be wasted. Lots of firms are dropping old plans that hemorrhaged money without producing noticable positive results while either adding or restoring more provably cost-effective plans. You are seeing the result of the churn over time.

We have seen a similar trend in our regional compensation studies and with some of our clients. Companies have stabilized or reduced their base pay fixed expense to reallocate funding for incentive programs that drive performance and results. They are willing to be less market competitive with base pay means and medians so they have the resources to meet or exceed the market on total compensation. Jim's comment about firms dropping old plans for new plans that produce higher returns on human capital investment is on target.

Jim and Blair:

Thanks for sharing your thoughts and experience - interesting that both of you noticed a similar trend.

I agree that what we see in this data is the net effect of a whole mixed bag of circumstances specific to different industries, organizations, business models, etc. But the fact that the net effect seems to be heading in a particular direction does seem to be worth noting and considering.

it actually shows pretty big difference!
interesting: something to think about huh?

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About The Author

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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