Variable Pay Attracts Top Talent

High-performing companies know the benefits of variable pay programs for non-executive workers and have successfully used such programs to recruit and keep good employees, according to a recent survey by Watson Wyatt Worldwide, a global human-capital consulting firm. Additionally, the survey found that 49% of U.S. employers (high and low performers) are revising or going to revise their variable pay programs "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." Indeed, 82% of all companies surveyed now have a variable pay program for non-executive employees, and 49% have a plan for all employees, according to the survey. In addition, 43% plan to put greater emphasis on variable pay. The survey also found that companies are projecting merit increases to average 3.4% next year, slightly higher than the 3% increase this year.