WASHINGTON--(BUSINESS WIRE)--Five years since the Great Recession, a new survey, “Compensation Programs and Practices” from WorldatWork shows the majority of organizations determine the value of employee jobs based on the market-pricing approach. WorldatWork, a nonprofit human resources association and leading compensation authority, conducted the 2014 survey of its membership to better understand the trends in compensation and practices. The survey focuses on the prevalence of base and variable pay programs as well as common practices used to administer and communicate these programs in today’s workplace. WorldatWork conducted similar compensation practices surveys in 2012, 2010 and 2003.
"Eighty-five percent of the respondents indicated they target employee base salary at the 50th percentile. Employers tend to largely assess the market value of jobs on an annual basis and address current market conditions on an as-needed basis. Currently, the market isn’t compelling employers to accelerate wage growth in any significant way,” said Kerry Chou, WorldatWork senior practice leader. “Another issue compensation professionals continue to struggle with is communication. This year’s data shows us that while nearly all organizations have a compensation philosophy, 45% report that most or all of their employees do not understand it.”
According to the 2014 report, the percentage of organizations providing minimal pay-related information to their employees is increasing, up to 39% in 2014. In addition, the 2014 report shows pay for performance continuing to thrive with 72% of respondents indicating they have a rating system with a performance score that is tied to pay increases. Furthermore, the results indicate that each employee’s understanding of the organization’s compensation philosophy tends to be higher when there is greater differentiation in increases between average and top performers.
A few additional highlights from the 2014 survey:
- More than 9 of every 10 companies have a compensation philosophy (92%), with 65% having a written policy and 27% having an unwritten policy.
- 28% of respondents indicate that most or all of their employees understand the company’s compensation philosophy.
- 82% of organizations use bonuses, which is the most frequently used variable pay plan for some or all employees.
- A majority (59%) of base salary structures for employees are still adjusted once a year, with 14% of companies adjusting their structures once every two years, which has increased by 5 percentage points from the previous two surveys.
- In 2014, as in 2012 and 2010, moderate variation — meaning top performers receive 1.5 times the average increase — is the most typical variation in salary increase between average and top performers.
- Most (52%) indicated that salary structures are defined by geographic regions; job category/role ranked second at 44%, which is a notable increase from 23% in 2012.
Previous survey results:
*Figure numbers referenced are from the 2014 WorldatWork survey, "Compensation Programs and Practices.”
WorldatWork experts are available for interviews to discuss this survey. To schedule an interview, please contact Amy Repke at amy.repke@worldatwork.org or 202-315-5514.
About WorldatWork®
The Total Rewards
Association
WorldatWork (www.worldatwork.org) is a nonprofit human resources association for professionals and organizations focused on total rewards strategies. Comprehensive total rewards strategies are designed to attract, motivate, engage and retain a productive workforce and ultimately, enhance organizational results.
Professionals engaged in compensation, benefits, work-life effectiveness and total rewards turn to WorldatWork as their leading professional association. WorldatWork and its affiliates provide comprehensive education, certification, research, advocacy and community for members and the broader total rewards community. WorldatWork has more than 70,000 members and subscribers worldwide; over 80 percent of Fortune 500 companies employ a WorldatWork member.
Founded in 1955, WorldatWork is affiliated with more than 70 local human resources associations and has offices in Scottsdale, Ariz., and Washington, D.C.
