ICS tapped on perks over pay raises: NYT, CBC
Following from the Institute for Compensation Studies’ recent comments in the New York Times, Stephanie R. Thomas, research associate, Institute for Compensation Studies at Cornell University’s ILR School, appeared on The Exchange with Amanda Lang to discuss businesses appear to be favoring one-off bonuses and nonmonetary rewards at the expense of annual pay raises.
In Aon Hewitt’s latest annual survey on salaried employees’ compensation, the percent of payroll going to variable compensation, such as short-term rewards and bonuses, has doubled while that for pay raises has declined. According to Thomas, “Given the economic climate, substituting the compensation system to variable pay/incentive pay gives the organization some more flexibility in terms of their compensation spending…taking the compensation from a fixed perspective of salary into a variable perspective where it is tied to the performance of the individual, of the department, of the business line and organization.”
Thomas adds, “Pay for performance, when done properly, can be very effective. It can help attract and retain top talent, increase employee engagement, drive motivation and make a difference in turns of the bottom line of the organization.”
Commenting on this trend in the New York Times (“One-Time Bonuses and Perks Muscle Out Pay Raises for Workers” by Patricia Cohen, May 25, 2015), Linda Barrington, Executive Director of the Institute, notes that for employers it is “really hard to cut wages and salaries, so the more compensation you can give in other forms, the more nimble you can be in a recession.”
The Exchange with Amanda Lang, May 26, 2015 (6:46)
"One-Time Bonuses and Perks Muscle Out Pay Raises for Workers," by Patricia Cohen, New York Times, May 25, 2015.
See also May 26, 2015 print story on page B1 of the New York edition (headline: One-Off Perks and Bonuses Supplant Raises)