Two March 2016 compensation surveys completed by Vivient Consulting and WorldatWork shows compensation plans used by privately held companies and nonprofits include annual incentive plans, discretionary bonuses and spot awards.
In November 2015, Vivient Consulting and WorldatWork invited a sample of WorldatWork’s non-publicly traded members to participate in their second “Incentive Pay Practices: Privately Held Companies” and “Incentive Pay Practices: Non Profit, Government Organizations” compensation surveys. Approximately 200 private, for-profit companies responded to the first survey, representing manufacturing, consulting, professional, scientific and technical services, finance and insurance, media, software and retail trades. More than 125 nonprofit and government organizations representing state, local and federal government entities, charitable and education organizations participated in the second sruvey. These 2015 compensation surveys update the original surveys completed by Vivient and WorldatWork in 2013.
The new 2016 compensation survey research shows that short-term cash incentives and bonus programs continue to dominate the incentive-pay landscape as a vast majority of organizations use and rely on incentive-based pay practices to recruit, motivate and reward employees.
Vivient’s Bonnie Schindler reports: “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, nonprofits and government organizations report their annual incentive plans are more effective than their for-profit counterparts — a sign that incentives are leveling the playing field for all organizations competing for top talent.”
Key Findings from the 2016 Compensation Survey for Privately-Held and Nonprofit Corporations
Compensation Trends in Private, For-Profit Organizations
- Between 2013 and 2015, the prevalence of short- and long-term incentive programs remained 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 programs.
- Annual Incentive Plans (AIPs), the most prevalent short-term incentive plan at private companies, are offered to employees at the exempt, salaried level and above at most organizations.
- At the 75th percentile, the majority of private companies increased their short-term incentive budgets to 12% of operating profit in 2015. They forecast an increase to 14% of operating profit for 2016.
Compensation Trends in Nonprofits and Government Organizations
- In 2015, more than 75% of nonprofit and government organizations favored simplicity by offering three or fewer short-term incentive plans.
- While government incentive-pay budgets remain modest, nonprofit budgets have increased significantly. Nonprofit, short-term incentive budgets are starting to approach the levels reported by the private, for-profit organizations.
- More than 80% of nonprofit and government organizations said their AIPs were effective at achieving their objectives.
- Of the nonprofit/government organizations with AIPs in place, 65% reported the programs are used to reward employees while 62% use the incentives to focus employees on specific organizational goals.
The two compensation surveys detailed results are available on the WorldatWork website:
Join Our ‘Incentive Pay Practices Survey’ one hour Tweet Chat at Noon EST March 22, 2016 at #IncentivePay with Kerry Chou and Vivient: @WorldatWork, @worldatworkchou and @Vivientconsult.