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Stuff in the Stockings?

Only about a third of companies will be offering bonuses this year, says one survey. But another one says incentive payouts will be bigger at a fai...
Lisa YoonDecember 2, 2002

It’s that time again. The holidays, that is. And like a house full of kids ransacking the closets in search of an advance peek at their holiday loot, workplaces buzz with anticipation of the holiday bonus. Two consulting companies released surveys on this year’s bonus trends. The results? Mixed.

First the bad news: Only about a third of companies are even offering a holiday bonus, according to the 2002 Holiday Bonus and Gift Study of 432 companies by consultancy Hewitt Associates. A good portion of the 67 percent of those that will not give bonuses this year never gave had a bonus program in the first place. But significantly, 16 percent used to do so but discontinued the program. Of those who discontinued bonuses, 37 percent did so — surprise, surprise — during the last two years.

Now the good news: No one is handing out fruitcakes this year.

Just kidding. Actually, according to Mercer Human Resource Consulting, 22.7 percent of 400 employers surveyed in an update of its 2002/2003 U.S. Compensation Planning Survey say their 2002 bonus payouts will be larger than 2001 payouts. That’s the total figure including employees at all levels.

Holidays on Ice…

While that may sound comforting, let’s not forget we’re still in a recession. The overwhelming majority of bonuses will be the same or less than last year’s.

At the executive level, 36.9 percent will be the same as 2001 bonuses, while 36.3 percent will be smaller than last year’s, according to Mercer. Incidentally, more senior executives will take smaller bonuses than workers at any other level except managers, also 36.3 percent. Only 30.3 percent of hourly workers will get smaller payouts. Of technical talent and nonexempt clerical workers, 36.1 percent and 33.1 percent, respectively will receive less than in 2001.

On the other hand, 26.8 percent of executive bonuses will be bigger than last year’s. Of managers and technical staff, 24.5 percent and 23.2 percent, respectively, will get bigger bonus payouts.

So how much money is that? Overall, executives will get bonuses equaling 29.4 percent of base pay — only half a percentage point more than last year’s payouts.

Of all employee groups, executives are the only ones whose bonuses represent a larger percentage of base pay this year than last. Managers’ bonus payouts, for example, will be about 14.8 percent of salary compared with 15.7 percent last year — even though their actual payouts will be larger. Ditto for technical employees, who will get an average of 9.1 percent of base, as opposed to 10.1 percent last year, even though in some cases their envelopes may be fatter.

…or Comfort and Joy?

According to Mercer, those latest numbers can offer a tentative glimpse at next year’s bonuses. Though on the whole, executive bonuses are expected to rise at a steady pace — to 30 percent of base pay or about 0.6 percent of a point — far fewer companies expect bonus payouts to be less than this year’s.

And here, too, executive pay takes a greater hit than does that of the rank and file. A solid quarter (25.4 percent) of executives will probably get more bonus money than this year, and 57.6 percent will get the same amount. And only 17 percent of employers surveyed expected executive bonuses to decrease next year — not bad.

But when it comes to cuts, lower-level workers, from hourly to management, will fare better still. Only 14 percent to 16.8 percent are expected to get smaller bonus checks than this year. Between 57.5 percent and 66 percent will see about the same amount of money, and 20 percent to 25.8 percent will get larger bonuses.

But that’s next year. This year offers less to be excited about. And, of course, there’s always fruitcake.