Incentive Award Trends for Non-Management Positions

I did some analysis on trends in incentive prevalence and average award size for non-management jobs, and thought I'd share some highlights here.  Sources for this information include newly released surveys from Watson Wyatt Data Services and others, representing thousands of organizations and hundreds of thousands of employees nationally.  I have also separated the data by profit sector, to look at not-for-profit practices versus those of for-profit organizations.  (The careful observer will note that the dominance of for-profit practices in the "all" data, probably due to sample sizes.)

Note also that the prevalence statistics here reflect employees who received an incentive award, not those who were eligible to receive one (presumable a larger number, as not every incentive plan pays out each year or for each employee).

Production/Technical/Trades Positions

• Percent receiving an incentive award
  • For-profit organizations:  32%
  • Not-for-profit organizations:  11%
  • All organizations:  28%
• Average incentive award paid (as % of base salary)
  • For-profit organizations:  4.4%
  • Not-for-profit organizations:  3.5%
  • All organizations:  4.3%

Office/Administrative Support Positions

• Percent receiving an incentive award
  • For-profit organizations:  39%
  • Not-for-profit organizations:  13%
  • All organizations:  35%
• Average incentive award paid (as % of base salary)
  • For-profit organizations:  5.6%
  • Not-for-profit organizations:  4.3%
  • All organizations:  5.5%

Professional Positions

• Percent receiving an incentive award
  • For-profit organizations:  41%
  • Not-for-profit organizations:  15%
  • All organizations:  37%
• Average incentive award paid (as % of base salary)
  • For-profit organizations:  7.5%
  • Not-for-profit organizations:  5.7%
  • All organizations:  7.4%

Comments

[Paul Hebert]

Are the "incentives" you highlight non-cash or cash based? It seems that the percentage of base pay these incentives represent are much lower than I would have expected.

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AB - These are cash incentives only. Perhaps I'll go back and edit the post to clarify that. The award levels have been pretty consistent over the years that I have been tracking them, considering a number of different sources. The other thing that may be worth noting is that these are not sales jobs, which typically see a much higher average incentive award level than other positions.

Is there other data that you can point me to that contradicts this in terms of incentives? I'd love to have other sources to consider, especially if they are reporting different conclusions.

Thanks, as always, for the comment and observation.

[Paul Hebert]

I have no data that contradicts your's.

However, in a non-cash program we typically look at between 3-5% of total base pay for the award value (non-sales) and it seemed odd that the cash-based incentive was similar.

What we show clients is that a non-cash incentive can generate a greater return on performance but with less cost.

What this data shows me is that companies are pretty much matching the non-cash incentive average which would indicate that non-cash incentive spend should be lower to achieve similar objectives - if we are to continue to demonstrate that non-cash awards have a cost advantage over cash for similar performance change.

However, the research doesn't highlight the type of cash incentive - whether it was performance-based, team-based, etc. which could also affect the numbers as well.