The accelerating trend toward rewarding top performers with higher raises than their peers — or variable pay raises — has been clearly quantified in an Aon Hewitt survey of 2014 salary increases.
Aon Hewitt reported that variable pay spending by large corporations should hit a 35-year-high of 12.7 percent of total payroll in 2015. That's the chunk of their salary budget that respondents forecast will go toward variable pay raises next year. Meantime, salary increases in general should move up 3 percent compared to 2014 — the highest annual increase since the 3.7 percent increase in 2008.
Aon Hewitt gathered information from 1,064 companies, and found that 91 percent of them now offer a variable pay program, compared to 78 percent in 2005. The average payroll amount carved out for variable pay raises in 2005 was 11.4 percent.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
