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January 27, 2010
Variable Pay Spending Has Grown Steadily Over the Past Decade

In a BLR webinar entitled "Where's My Raise? How to Handle Tough Pay Conversations With Employees," Theresa Murphy of HR Partner Advantage and David Wudkyka of Westminster Associates reported that variable pay spending has been steadily growing over the past decade.

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Today's spending on these types of compensation programs is almost twice the level spent 15 years ago. In 2010, surveyed companies were budgeting variable pay bonuses at 11.8 percent.

"Even in the toughest economies, companies are willing to reserve money for top-performing employees as a way to reward their performance and ensure they retain these employees after the job market rebounds," said Ken Abosch, leader of Hewitt Associates' North American Broad-Based Compensation Consulting business. "Over the past decade, we've seen companies steadily shift from a fixed pay model to one that emphasizes true performance-based awards, and we expect this trend will continue."

Theresa Murphy is the principal consultant for HR Partner Advantage, an independent human resources advisory firm based in Raleigh, N.C. She may be contacted at tmurphy@hrpartneradvantage.com. David Wudyka is the founder and managing principal of Westminster Associates, a Massachusetts-based human resource and compensation firm that specializes in pay, performance and productivity issues. He may be contacted at dwudyka@westminsterassociates.com .

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