Yesterday, PricewaterhouseCoopers launched the sixth in a series of Snapshot Survey reports on Short-term Incentive Schemes (STIS), designed to give up-to-date information on company bonus and commission plans offered to employees at various levels within organisations across a variety of sectors.
The survey found that a Company Bonus Plan is a standard element of the total pay package for many employees, ranging from 95% of respondents reporting that their chief executive/head of unit is eligible for a company bonus to 88% of respondents reporting that manual/line workers are also eligible for a company bonus.
Launching the report, PricewaterhouseCoopers HR services partner Mark Carter said: “to ensure acceptance for downside as well as upside movements in bonus payments, it is vital that an organisation be transparent in relation to its bonus policy. Most employers believe that attractive reward packages, including short-term incentives, help to attract and retain high-quality staff. But many employers fall down in communicating with employees. When they have limited information, employees often misinterpret schemes which are designed with the best of intentions. Time spent in effectively communicating the incentives is as important as time spent designing the incentives.”
HR services manager Maeve Heffernan, added: “considering the various factors influencing remuneration levels, one of the interesting findings is that one in two employers indicate that bonuses for 2004 are expected to be more or less in line with payouts made in 2003.
“The average target bonus for 2004 reported at CEO level is 30% of base salary and ranges from 2% to 100% of base salary.”
The average target bonus for 2004 (payout in 2005) for clerical/administrator roles is 8.9% of base salary. The average target sales commission percentage for sales representatives is 33% of base salary.
Almost six out of every 10 respondents say “performance against pre-defined objectives” is the most common basis on which bonus decisions are made.