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Nearly half of all employers with variable pay plans have revised them in the past year as companies continue to shift from fixed pay to variable pay, according to a survey by Watson Wyatt, a consulting firm. Of the changes made, the most common was revising the performance measures on which bonuses are based (68 percent), followed by increasing goals employees are expected to achieve to earn an award (46 percent). More than one out of four increased the size of target awards employees receive for achieving goals.
“Employers are trying to better link variable pay programs with organizational and individual performance,” says Laura Sejen, director of strategic rewards consulting at Watson Wyatt. “Clearly, employers are raising the bar for employees. As variable pay becomes more prominent, companies are realizing they need to carefully distinguish reward allocations to recognize outstanding employee performance if they are going to attract and retain top talent.”
The survey also found that 82 percent of companies now have a variable pay program for non-executive employees, and 49 percent have a plan for all employees.
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