Most organizations are staying the course - from a reward plan standpoint - in the face of the current economic slowdown, according to the Compensation Force Spot Survey conducted over the past few weeks.
Full survey results reported below.
Salary Increase Budgets/Guidelines
Most organizations are holding firm to their originally established 2008 salary increase budgets and guidelines.
Question: What impact, if any, are current economic concerns having on your 2008 salary increase budget/guidelines?
- No change since originally established and approved: 70%
- We are considering a reduction to our original salary increase budget/guidelines: 15%
- We have made a reduction to our original salary increase budget guidelines: 9%
- Other: 6%
Base Salary Freezes
Most organizations are not even considering freezing base salaries at this time.
Question: Are you considering, or have you made a decision to freeze base salaries?
- We are not considering freezing base salaries at this time: 79%
- We are considering freezing base salaries: 15%
- We have frozen base salaries: 6%
Incentive/Variable Pay Award Levels
Most organizations have not changed originally established and approved 2008 incentive/variable pay award levels.
Question: What impact, if any, are current economic concerns having on your 2008 variable/incentive pay award levels?
- No change from originally established and approved award levels: 70%
- We are considering increasing award levels from where originally established: 9%
- We have increased award levels from where originally established: 3%
- We are considering reducing award levels from where originally established: 6%
- We have reduced award levels from where originally established: 12%
Incentive/Variable Pay Plan Design
Most organizations have not changed the design of their 2008 incentive/variable pay plans.
Question: What impact, if any, are current economic concerns having on the design of your 2008 incentive/variable pay plan(s)?
- No change from originally established and approved plan design(s): 64%
- We are considering changes to the original plan design(s): 27%
- We have made changes to the original plan design(s): 9%
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Comments from Ann: For the most part, these results don't surprise me, and they mirror my personal experience in the marketplace to date. The exception to this is the amount of change underfoot in incentive/variable pay plans; I am surprised by the fact that nearly 20% of participants are either reducing or considering reducing their incentive/variable pay plan award levels. Since these plans, if designed and implemented well, should only pay off as a result of successful performance, they ought to reflect an ideal reward for difficult economic times - and, if anything, should be the focus of increased (rather than reduced) emphasis. The decision to reduce awards suggests to me a lack of alignment; in other words, the plans may be designed to reward things that don't ultimately contribute to the organization's success. A pretty serious design flaw, if you ask me - and a critical one to address, particularly in tough times.
Results of this inaugural Spot Survey reflect the responses of 35 participants - Compensation Force readers as well as Altura Consulting clients. Thanks to all who took the time to participate!
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