Companies to pay based on performance

WASHINGTON, Nov. 1 (UPI) -- More U.S. employers are revising their wage plans to pay based on performance, a survey by Washington-based consulting firm Watson Wyatt shows.

The survey found 49 percent of all respondents with variable pay plans have revised them during the past year. Of the changes made, the most common was revising the performance measures on which bonuses are based (68 percent), followed by increasing goals employees are expected to achieve to earn an award (46 percent).

More than one out of four (27 percent) increased the size of target awards employees receive for achieving goals.

The survey showed 82 percent of companies now have a variable pay program for non-executive employees, and 49 percent of organizations have a plan for all employees.

Among respondents planning future changes to their reward programs, 43 percent intend to put greater emphasis on variable pay.

"Employers are trying to better link variable pay programs with organizational and individual performance," said Laura Sejen, director of strategic rewards consulting at Watson Wyatt.

Low-performing firms made the most revisions to their short-term incentive plans, with 63 percent having made changes during the past 12 months.

WW polled 242 U.S. organizations for the 2004/2005 Strategic Rewards survey.