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Bonuses and Merit Pay Increases Continue, Despite Economy
03/04/03
Compensation and Benefits Review
In 2001, the economy went south with bonuses and raises in tow. Despite a continued weak economy, high unemployment, cutbacks and layoffs, 2002 offered one bright spot-the return of bonuses and merit pay increases. According to a new study from Compensation Resources, Inc., many U.S. companies rewarded employees with some form of bonus and merit increases.
Compensation Resources, Inc. surveyed852 companies for its 2002 Annual Bonus and Budget Survey and found that 43% of the respondents anticipated their bonus payments would be the same or larger than 2001. The survey indicated that 22% would pay smaller bonuses, and 30% were not eligible for bonuses. The survey covered several employer sizes; 84% of the responses came from firms with less than $500 million in revenue, whereas 34% of the responses came from firms with less than $50 million in revenue.
The 2002 study reported that 16.8% of the companies indicated that the annual bonus for their executive team would be larger than 2001. Conversely, among management and exempt salaried personnel, approximately 25% of the companies indicated these bonuses would be smaller than the 2001 bonuses. The data indicates that an increasing number of nonexempt and hourly production workers would not be eligible for awards in 2002. Of those that do pay bonuses to these employees, 30% of the respondents indicated the bonuses would be the same or larger.
“We are not surprised that these middle-market companies are continuing to offer year end bonuses, as we have noticed a resilience and determination to survive among these firms,” said Paul Dorf, managing director of Compensation Resources, Inc. “We believe these organizations are working hard to link performance and rewards and are focused on their variable pay plans in 2002.”
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