Firms 'not using cash bonuses'
Thursday, 2 July 2009
The economic downturn is causing companies to use less financial bonuses, research has claimed, which may show the value of non-cash alternatives.
According to a survey by Aon Consulting's Radford service, a survey of 160 high-tech firms found that more than 70 per cent expect to pay lower bonuses or none at all this year.
In addition, the research discovered that many are deciding to use alternatives, such as special incentives or project team rewards, to recognise superior efforts and outcomes.
David Knopping, vice president of Aon Consulting's Radford, commented: "In times of economic turmoil, a properly-designed incentive plan acts as an automatic cost stabiliser, paying out when company performance meets expectations and not paying out when performance and financial ability is lacking."
He added that this approach means that incentive programmes are doing exactly what they are designed to achieve, but admitted that employees who have become used to receiving annual bonuses may not recognise this immediately.
Recently, Tom Hadley, director of external relations at the Recruitment and Employment Confederation, said many firms are aware of the need to retain key workers in the difficult economic climate and are intending to continue with incentive programmes.