Human Resources: Pay-for-Performance Remains Strong

New York, NY (PRWEB) November 20, 2009 -- Bonus participation is holding steady compared to 2008 and is consistent with the pay-for-performance philosophy most companies have adopted, although there is more variability in the size of bonuses, according to a Buck Consultants survey of U.S. companies released today.

Buck's survey, "Compensation Planning for 2010," found short-term incentives, typically annual and based on company-wide performance, are the most prevalent program design (61 percent), surpassing programs based on business unit, team, or individual performance. For employers with short-term incentive programs, employee participation averages more than 90 percent at all employee levels.

As the economy begins to show signs of recovery, compensation practices should gradually begin to adjust to pre-recession levels
Although reducing bonuses can present challenges, it is appropriate to do so when performance necessitates such action. We advise our clients to remain true to their pay-for-performance philosophies in good times and bad.
It is likely that any upward adjustment in salaries will occur at a much slower rate than the drop that took place, and there is a good chance that future pay increases will remain lower than past levels for a while
Companies will tend to be very conservative about increasing fixed payroll costs until the economy is quite healthy. Until we begin to see clear and consistent increases in employment and capital expenditures we don't expect any significant upward movement in pay increases.
"As the economy begins to show signs of recovery, compensation practices should gradually begin to adjust to pre-recession levels," said Tom Burke, principal at Buck Consultants. "Although reducing bonuses can present challenges, it is appropriate to do so when performance necessitates such action. We advise our clients to remain true to their pay-for-performance philosophies in good times and bad."

Eighty-three percent of organizations participating in the 2009 survey subscribe to pay-for-performance compensation philosophies. A similar percentage of organizations have short-term or annual incentive programs with the most prevalent type of program being a company-wide incentive plan or profit sharing plan.

Buck Consultants, an ACS company and a leading human resources consulting firm, completed its survey in September. The survey includes responses from more than 250 employers, representing virtually every sector of the U.S. economy. It examines salary increase budgets, short-term incentives, and pay-for-performance practices.

Buck's survey also found the average salary increases for fiscal year 2009 range from 1.2 percent to 2.0 percent, depending on employee level. Increases planned for 2010 will be higher, ranging from 2.5 percent to 2.8 percent.

"It is likely that any upward adjustment in salaries will occur at a much slower rate than the drop that took place, and there is a good chance that future pay increases will remain lower than past levels for a while," said Burke. "Companies will tend to be very conservative about increasing fixed payroll costs until the economy is quite healthy. Until we begin to see clear and consistent increases in employment and capital expenditures we don't expect any significant upward movement in pay increases."

Other key findings include:

· Seventy-two percent of employers have a pay communication philosophy. The types of pay information shared with managers and employees vary, but 70 percent of organizations communicate their compensation strategy and bonus opportunities with both managers and employees.
· Organizations that use a four-level or five-level performance rating scale tend to display more distinct differences in average salary increases based on performance than organizations that use fewer or more levels to measure performance.
· Fifty-four percent of employers overlook a hidden funding source for rewarding top performers – money that was budgeted but not spent on salary increases due to terminations or poor performance.

Buck Consultants, an ACS company, is a leader in human resource and benefits consulting with more than 1,500 professionals worldwide. Founded in 1916 to advise clients in establishing and funding some of the nation's first public and private retirement programs, Buck is an innovator in the areas of retirement benefits, health and welfare programs, human capital management, compensation, and employee communication. News and other information about Buck Consultants are available at Affiliated Computer Services, Inc.

ACS, a global FORTUNE 500 company with approximately 76,000 people supporting client operations reaching more than 100 countries, provides business process outsourcing and information technology solutions to world-class commercial and government clients. The company's Class A common stock trades on the New York Stock Exchange under the symbol "ACS." Learn more about ACS at www.acs-inc.com.

Buck's survey report, "Compensation Planning for 2010," is available at no cost to the media by contacting Ed Gadowski at 201-902-2825. It is available to other interested parties for $200 from Buck's Global Survey Resources, 500 Plaza Drive, Secaucus, NJ, 07096-1533. Telephone 1-800-887-0509. It can also be ordered online at www.bucksurveys.com.