Holiday bonuses remain fewer, frugal despite rising economy
By Stephanie Armour, USA TODAY
Companies are holding back on year-end bonuses despite the recent uptick in the economy.
Nearly two-thirds of companies won't offer a holiday bonus this year, according to a survey by human resources firm Hewitt Associates.
And only about a quarter of employers said incentive payments such as annual bonuses would be larger in 2003 than they were in 2002, according to a poll by Mercer Human Resource Consulting. Far more said their payouts would be equal or less.
"It's a little more pessimistic than we expected, and it's a dramatic turnaround from what we saw several years ago," says Steven Gross at Mercer. "The recovery hasn't been as robust as companies expected."
CUNA Mutual Group in Madison, Wis., which underwent layoffs last year, is forgoing a holiday bonus for a second year as part of an agreement with union members.
In addition, the company won't hold its usual formal, off-site hotel party. Instead, it will hold an on-site gathering to mark the year.
"Even though we're not having the traditional party with steak-and-shrimp dinner, we still want a way for employees to celebrate," says Sydney Lindner at CUNA Mutual. "It's clearly going to be less expensive, but this gives us all an opportunity to gather and reflect."
At HR Staffing Solutions, a temporary staffing service based in Syracuse, N.Y., year-end bonuses will be about 30% less than they were last year.
"We had a good year, and we'll give bonuses, but I'll be careful to protect our capital," says S. Graham Atkinson, president of HR Staffing.
One reason for the frugal approach is the labor market. A 6% jobless rate means employers don't need to shower bonuses on workers to keep them.
Companies are still struggling to meet earnings expectations without raising prices. With other costs such as health care climbing, they're relying on ramped-up productivity and cost-cutting measures such as smaller bonuses.
"A lot of bonuses are tied to sales growth, and that high-revenue growth hasn't been there," says Tom Wamberg, CEO of Clark Consulting, an executive compensation and benefits firm in Barrington, Ill.
But many employees won't be surprised. A survey by Clark found 70% of executives from Fortune 1,000 companies expected to fall short of earning maximum annual bonuses.
While some workers get only a nominal amount for a bonus, others rely on yearly payouts for a financial boost. Bonus payouts are common in financial services, sales and for executives in many industries. For executives, incentive payouts can be as high as 35% of base salary; for hourly workers, they are closer to 5% of annual pay.
The good news? If the economic recovery continues, most companies expect bonuses to be higher next year. |
