Variable Pay Programs – How Popular Are They?

Variable pay is any type of direct pay that is linked directly to an individual, team, or organizational performance. There are many kinds of variable pay programs – safety awards, attendance bonuses, year-end bonuses, and lump-sum payments, to name a few. Employers Council has been surveying variable pay programs since 1975.

In the Employers Council 2019 Miscellaneous Benefits/Pay Practices Survey, 85 percent of all participants had some type of incentive program for their employees. Organizations that do not have an incentive program were comprised of 30 percent government employers and 16 percent manufacturing/non-manufacturing companies. Bonus programs – any direct lump-sum payment given in addition to base salary – are the most prevalent variable pay program reported in the survey.

Displayed below are comparison data for organizations having bonus programs from the 2017 to the 2019 Miscellaneous Benefits & Pay Practices Surveys. The 2017 average annual bonus payout for clerical/tech and production/maintenance positions was 6 percent; for supervisory/professional it was 9 percent and top management received an average 19 percent. The average annual bonus payout projected for 2019 for bonuses is 7 percent for clerical/tech; 5 percent for production/maintenance positions; 14 percent for supervisory/professional and 24 percent for top management.

Other programs used by employers to incentivize their employees are a one-time bonus based on achievement of specific goals (20 percent), Christmas/Holiday gift (27 percent), spot cash awards (19 percent), and 15 percent of respondents use special non-monetary recognition awards.

Go to EmployersCouncil.org to see the full display of data for the 2019 Miscellaneous Benefits/Pay Practices Survey.