Use of bonus plans on the increase among US organisations, with sign-on bonuses remaining the most prevalent – WorldatWork

The adoption of referral, sign-on, spot and retention bonus programmes continues to grow as organisations seek other forms of cash compensation to reward employees, according to a new survey by WorldatWork. The survey reveals a modest increase between 2014 and 2016, with more than 60% of respondents indicating that bonus programmes positively affect employee engagement, motivation and satisfaction.

Rose Stanley, senior practice leader at WorldatWork, said:

‘Organisations are increasingly finding additional ways to compensate their employees as merit budgets continue to remain stagnant. We have seen a big increase in organisations using all four bonus programmes as needed compared to 2010 when the majority of organisations were only using one programme. As merit budgets remain flat, employers aren’t standing still and doing nothing in regards to compensation. They are using bonus options as needed to recruit and retain top talent.’

Key findings

• Sign-on bonuses are the most common bonus programme with 76% of organisations adopting this bonus method.
• 32% of organisations use all four types of bonus, while the remaining 10% of organisations have no bonus in place.
• While many organisations do not budget for bonus programmes – particularly sign-on and retention bonuses – 55% of companies do budget for their spot bonuses, and 44% budget for referral bonuses.
• Sign-on and retention bonuses are least prevalent among small organisations (fewer than 100 employees) and most prevalent among larger organizations (greater than 20,000 employees).

Stanley said:

‘As with many of the total rewards elements, organisations continue to use different tools in their total rewards toolbox as they deem necessary to create an engaging employee value proposition. These four different types of bonus programmes can assist organisations in a variety of situations. They allow them to respond to different situations that they may find themselves in due to influences both internally or externally.’

Glossary

For the purposes of the survey, each type of bonus was defined as follows:

• Referral bonus – a cash award paid to a current employee for referring a successfully hired job applicant.
• Sign-on bonus – a cash bonus given at the beginning of a service period, usually for accepting an employment offer.
• Spot bonus – a type of informal recognition that is delivered in cash, spontaneously or ‘on-the-spot’.
• Retention bonus – a cash award typically tied to length of service or some other milestone.

WorldatWork has more than 70,000 members and subscribers worldwide; more than 80% of Fortune 500 companies employ a WorldatWork member. Founded in 1955, it has offices in Scottsdale, Ariz., and Washington, D.C., and is affiliated with more than 70 HR associations around the world.

‘Bonus Programmes and Practices’, WorldatWork, July 2016. Survey invitations were sent electronically to 5,200 WorldatWork members 16 March 2016. The survey closed 1 April 2016 with 726 responses – a 14% response rate. The demographics of the survey sample and the respondents are similar to the WorldatWork membership as a whole. The typical WorldatWork member works at the managerial level or higher in the headquarters of a large company in North America. To view the survey results, please visit: www.worldatwork.org/adimLink?id=80398