Bonuses spreading, but do they work?

Looking at effectiveness of variable pay programs
By Mary de Reus
|Canadian HR Reporter|Last Updated: 01/25/2008

There is a clear trend in compensation surveys — employers are moving towards a risk/reward culture. There is an increasing emphasis on pay tied to results, with fewer positions offering only guaranteed pay.

Not surprisingly, variable pay is most common at the executive level. But what is surprising is the extent to which the use of bonuses and incentives is spreading throughout organizations, to all levels of staff. Also surprising, and challenging, is the de rigueur nature of payouts of executive bonuses.

These trends raise important questions for HR professionals. How well are current variable pay programs working? Are they worth the work that goes into their design and implementation? What are the implications for expanding them beyond the executive suites? How must they change in the future?