They're clearly sending a message to employees that they will be rewarded for high performance.
Variable pay is designed to help employees concentrate on company goals and objectives, while eliminating 'entitlement' issues that often arise with a holiday bonus.
We may never see base salary increases in the mid-to-upper 4 percent range again.
The fact we saw 10 percent of organizations freezing salaries was astronomical. It was a really unusual year.
They're seeing that as a way to reduce their costs in some places. Some might think employers are taking a Scrooge mentality, but they're putting it into a different form.
Employers recognize that the value in tying awards to performance, as opposed to the holidays, better connects employees to the company's goals and objectives, eliminates 'entitlement' issues, and leads to increased productivity and improved business results.
Most employees view base salary as a barometer of their worth, so thinking about a steady decrease in the amount of money being provided to them has had a psychological impact. That's why organizations looked to variable pay as a way to counteract that -- until recently.
It indicates how employers have shifted their focus on how to pay their employees.
The good news is that after seeing very significant reduced spending overall, companies are projecting a slight recovery for 2003.
