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Performance Pay Trends 2019

Do your packages reward your best talent?

Compensation Strategy & Design|Total Rewards
Beyond Data

October 28, 2019

Is your performance pay helping to motivate your best talent? What are the trends you should focus on this year?

More often than not, short-term incentives (STIs) are viewed as a tool (with a specific budget) for recognizing employees’ contributions to the business’s overall success with a view to rewarding past performance as well as driving future behaviors. While certain kinds of STIs – such as annual performance bonuses – are certainly compensation staples for multinationals worldwide, in reality, STIs can be far more complex and varied. Our latest research explores the world of STIs, and identifies certain design and application aspects that employers should take notice of.

For example, many multinationals aim to design performance bonuses as globally consistent “programs” with clearly defined mechanics that establish goals for staff. In turn, these link to a target reward, where achievement is defined as a function of meeting those goals. Usually, broader business context is factored in (often through bonus pool funding) and renders a final payout per employee. And while this is market practice in most places, some markets, organizations will follow a discretionary route, with prevalence varying around the world. Ultimately, practices are subject to a whole host of influences, including sector, culture, collective bargaining and tax treatment among others. As these practices vary locally, it also means that the processes need to be adapted.

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