150家大中型公司的高级经理反映，其薪酬激励计划根本没有起到作用。只有不到三分之一（32%）的受访高管认为他们的计划“能够有效地根据个人的不同表现给予不同的薪酬。”Willis Towers Watson公司最新公开了这一研究。
如果绩效薪酬的方案没有这么流行，这也不会是个大问题。在2014年创造历史最高纪录之后，依靠激励性工资来获得出色业绩的公司还在越来越多。Willis Towers Watson 公司全球薪酬主管劳拉•赛伊恩发现：“公司每年要花费几亿美元来实施这些令人失望的计划。如果这是任何其他业务流程，我们现在早就去着手改善投资回报率了。”
In theory, it sounds like a no-brainer: Come up with a compensation system that rewards and encourages topnotch employees with bonuses and other short-term incentives. Fund it, without blowing up the overall pay budget, by giving mediocre (or worse) performers tiny raises, or none at all.
In practice, though, it’s a different story.
Senior managers at 150 large and midsized companies in a new Willis Towers Watson studyadmit their incentive pay plans don’t actually work. Barely one-third (32%) of the executives polled think their programs are “effective at differentiating pay based on individual performance.”
Only half say annual incentives, like bonuses for top employees, make any difference in how well people do their jobs. Least effective of all: Merit raises, which managers are supposed to give (or not) to employees based on, well, merit. Just one in five (20%) of the executives surveyed thinks merit pay “drives higher levels of individual performance” in their companies.
This wouldn’t matter quite so much if pay for performance plans weren’t so popular. But, since reaching a record high in 2014, the number of companies counting on incentive pay to produce stellar results has kept on rising. “Companies are spending hundreds of millions of dollars a year on these disappointing programs,” observes Laura Sejen, global chief of rewards at Willis Towers Watson. “If this were any other business process, certainly we’d all have moved to improve the ROI by now.”
So what’s the hold-up here? The biggest reason incentive pay so often doesn’t deliver results, it seems, is that individual managers don’t stick with the program.
That’s especially true when it comes to merit raises. “The traditional annual raise has become so ingrained in U.S. companies that every employee over age 30 has ‘grown up’ with it and expects it,” observes Sejen. “Now companies are saying, ‘OK, from now on, not everyone gets a raise every year.’ They’re relying on managers to keep some salaries flat so they can pay larger salary raises and bonuses in critical, targeted areas.”
Those managers, however, are the ones who face difficult conversations with unhappy subordinates who don’t get pay hikes. So most often, bosses are still handing out annual “merit” increases, regardless of how individual employees perform. Not only that, but 26% of companies in the study have paid bonuses even to “employees who fail to meet expectations.”
It would probably help if there were more cash to go around—that is, if companies fully funded their projected bonus pools. The study notes that has happened only twice since 2005, adding that “average projected bonus pool funding levels for 2015 were only 87% of target.”
When combined with that shortfall, managers’ tendency to chicken out on conflict with mediocre or underperforming team members means that “even top performers receive a lower bonus than called for in the plan design,” says the study. In the current market for talent, a skimpy payout may look pretty unappealing next to the signing bonus a competitor is offering.