A new survey shows that few companies have fiddled with employee compensation models outside their sales departments.
Despite steadily aging work forces, technology advances and globalization trends of the past decade, most companies have made only minimal changes in how they pay or reward employees outside of their sales departments, according to Towers Perrin, a Stamford firm that consults on employee benefits.
Towers Perrin released results from a limited number of questions from its survey, with full results to be published later this year. Respondents included more than 600 personnel managers at midsized and large organizations
A separate survey last month by New York City-based Mercer Human Resource Consulting determined paychecks should increase 3.8 percent next year, level with this year”™s expected increases in compensation. Executive bonuses are expected to increase 47 percent this year, versus a 40 percent spike in 2006, while middle managers can expect a 22 percent boost in bonuses, compared with 19 percent last year.
Local economists are warning that any contagion in the financial markets could have a significant impact in bonuses for Fairfield County residents working in financial firms (see story on Page 1).
More than 40 percent of respondents to the Towers Perrin poll said they have recently adapted using companywide performance to gauge variable pay such as bonuses, which Towers Perrin said is surprising given that a relatively small number of employees can material influence corporate results.
“The last decade has been among the most turbulent in recent business history,” said Ravin Jesuthasan, managing principal of Towers Perrin, in a written statement. “In this environment, we expected to see comparable innovations in rewards practices. Instead, we found ”¦ a pattern of ”˜tweaking”™ at the edges of programs, rather than creating the more systemic and integrated approach required to address the scope, intensity and magnitude of change on the business side.”
While nearly 60 percent of companies surveyed customized compensation, some 80 percent of them did so chiefly for sales positions, with few extending the practice to other areas, including customer service or research and development.
Fewer than a third of companies measure the effectiveness of their reward programs. Towers Perrin suggests companies revamp programs to:
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Ӣ Think in terms of big, bold change. Shake things up, the firm advises, but in a way that aligns with core business goals.
Ӣ Identify needed changes in terms of desired business outcomes, and prioritize those changes based on the effectiveness, impact and strategic relevance.
Ӣ Place systematic bets on specific programs and segments of the work force that align with business objective and priorities. Avoid a one-size-fits-all approach.
Ӣ Develop metrics that encompass the key outcomes needed and measure results, with the ability to change course as needed.
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