With average merit increase budgets remaining steady at below 3%, once again, for 2016 and projected 2017, more companies are considering to provide one-time performance bonuses in order to reward for strong individual results. This practice is typically reserved for exempt employees, and specific goals are set for individuals so that above standard duties, responsibilities and expectations are recognized and rewarded.  This targets additional dollars from limited merit increase budgets to those more deserving.

Before developing such a variable pay program, a readiness assessment audit should be performed in order to ensure a new performance awards mechanism complements your organization’s compensation philosophy.