The good news for workers, according to data released Wednesday by Aon Hewitt, is that company spending on compensation has reached a new high.
In 2015, the human resources consultancy reported, workers will see a flat 2.9 percent increase in base pay on average, but they’ll also see a 12.9 percent increase in “variable pay” — things like bonuses, incentives and other cash rewards — the highest increase in 39 years.
That’s nice work, if you can get it. The bad news for many workers is that fewer companies are sharing the wealth with their salaried “nonexempt” employees — people in clerical and technical jobs such as administrative assistants, machine operators or electricians who are eligible for overtime and make up a huge segment of many companies’ workforces.
A prior survey on variable pay by Aon Hewitt released last fall shows that in 2009, 61 percent of companies in its survey included these workers in its bonus pools, and 83 percent included salaried “exempt” workers — white-collar professionals who aren’t eligible for overtime.
But by 2011, just 43 percent of companies were including these clerical and technical workers in their incentive programs, and that percentage hasn’t really recovered. It ticked up slightly to 47 percent in 2012, but in 2014, only 43 percent of companies were again handing out bonuses or other cash awards to these workers. Meanwhile, 93 percent of companies now give them to white-collar professionals.
“It’s the haves and the have nots,” said Ken Abosch, who leads the firm’s broad-based compensation practice for North America. “There seems to be a different set of standards that organizations have — and I would say inexplicably, in many cases — for the disparity in value they perceive in different levels of the organization.”
While the companies that respond to the firm’s variable pay survey are not identical from year to year, Abosch said the overlap is greater than the firm’s annual salary survey and consistent enough that he’s “very confident” in the reliability of the downward trend the data reveals.
“This is not just about changes in participation in the survey,” he said.
The finding comes at a time when companies are increasingly rewarding bonuses and short-term incentives to their white-collar workers as a way of competing for talent in an improving labor market — but without having to make the more permanent move to lift base pay.
Not only are bonuses generally tied to performance metrics that companies hope will boost productivity, they’re also far easier to limit or even take away than raises are if times get tough.
Back in 1988, for example, when Aon Hewitt started tracking the data, the percentage of payroll that went to raises on base pay was 3.9 percent; another 5 percent went to funding bonus programs. Fast forward to 1998, and those numbers were 4.2 percent and 8 percent, respectively.
