Content area
Full text
Since our readers are always interested in the "latest and greatest" information on payfor-performance plans, PFP is happy to offer the following excerpts from a new study by PricewaterhouseCoopers. The 1999 Incentive Programs survey (for purchase information, see below) examines how the five most popular incentive programs are used in companies and the key points of success for each.
Annual incentives rule. As is so often the case, annual incentive plans are the most widely used program in place, used by 88.9% of the companies in the survey (see Table 1, "Incentive Pay Plan Prevalence, by Industry"). Broken out into 15 different industries, the study finds that annual incentive plans are most popular among business services companies (27.2%), followed by transportation equipment firms (11.8%). On the other hand, only 1.5% of communications and telecommunications firms offer annual incentives.
Annual incentive plans reward employees for achieving specific business goals. In nearly every company, the reward consists of cash-only 5% of organizations offer a mix of cash and stock. The goals of this plan type, typically, are to improve profitability and to link individual performance to company performance.
Senior management is the employee group most often eligible for this type of plan, at 94.1 (see Table 2, "Employee Groups Eligible for Each Type of Incentive Plan"). To be eligible, a member of this group must receive an average minimum salary of $100,000. Most middle management employees are also eligible (85.3%), as are 80.9% of CEOs. Less than half of supervisors and other employees are eligible.
Long-term incentive plans are succeeding in achieving their goals: retaining employees and increasing profits. More than half (55.9%) of companies say their plan is achieving all...