Annual incentive plans, discretionary bonuses and spot awards most commonly used by companies in USA – WorldatWork and Vivient Consulting

Short-term cash incentives and bonus programmes continue to dominate the incentive-pay landscape in the United States as a vast majority of organisations use and rely on incentive-based pay practices to recruit, motivate and reward employees, according to new research released today by WorldatWork and Vivient Consulting. The study compares the pay practices across two sectors: privately-held companies and non-profit/government organisations.

Private, for-profit organisations:

• Between 2013 and 2015, the prevalence of short- and long-term incentive programmes remained fairly steady at private companies.
• Short-term incentives decreased slightly to 94% from 97%, while long-term incentives also decreased slightly to 53% from 56%.
• In 2015, almost 75% of privately held companies with a short-term incentive plan offered at least three programmes.

Non-profit/government organisations:

• In 2015, more than 75% of non-profit and government organisations favored simplicity by offering three or fewer short-term incentive plans.
• While government incentive-pay budgets remain modest, non-profit budgets have increased significantly.
• Non-profit, short-term incentive budgets are starting to approach the levels reported by the private, for-profit organisations.

Kerry Chou, WorldatWork senior practice leader for compensation, said:

‘As organisations continue to recognise that incentives are powerful tools, short- and long-term incentive programmes remain prevalent across both the public and private sectors. By linking compensation programmes to cash and long-term incentives, organisations can recognise the behaviors and complexities of today’s multi-generational workforce, enabling them to create and sustain improved employee performance and organisational success.’

Bonnie Schindler, partner at Vivient Consulting, said:

‘While cash continues to dominate long-term incentives at private companies, we are seeing an uptick in the use of real equity in the form of stock options. In addition, non-profits and government organisations report their annual incentive plans are more effective than their for-profit counterparts – a sign that incentives are leveling the playing field for all organisations competing for top talent.’

Approximately 200 private, for-profit companies and more than 125 non-profit and government organisations responded to the survey in November 2015. The two surveys are available on the WorldatWork web site:

> 2016 Incentive Pay Practices: Privately held companies

> 2016 Incentive Pay Practices: Non-profit/government organisations