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Bonuses are back and the fat cats get fatter

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Money

With December the traditional month for end of year bonuses, one stereotype that appears to be true is that senior managers benefit most.

Of the three quarters of British employers that operate bonus schemes, management is still the most likely to benefit, only 38% use them across the entire workforce, according to a survey of 365 HR specialists by The Work Foundation.

Managers are most likely to be offered a scheme, to be assessed on sales/profit alone, and to be awarded a higher proportion of earnings as bonuses. They also appear to be offered bonuses for different reasons as their annual payments are more for loyalty and strategic reward, where quarterly, monthly and even weekly schemes are designed to achieve set objectives.

“The weeks before Christmas focus attention on bonuses as many organisations still make their annual awards at this time. While there is a growing equality, senior management is still treated differently,” said Stephen Bevan, director of research, The Work Foundation. “There is clear evidence though that organisations are much more sophisticated in their use of bonuses to achieve short, medium and long term business objectives and much more likely to include more of their employees in bonus schemes,” he continued.

Encouragingly, almost two thirds of companies believe their schemes to be effective in meeting organisational objectives. Despite this, few new schemes have been introduced in the last couple of years, but 71% of companies asked do plan to introduce them or make changes to existing schemes.

Improving business performance (67%) and creating a direct link between employee and corporate performance (60%) are the most common objectives.

59% of organisations operate more than one scheme (the average number of schemes across all employers questioned is 2.9), with larger organisations much more likely to operate multiple schemes. However, the general maxim seems to be ‘keep it simple’ as the majority of schemes directly link performance gains to bonuses. This is most prevalent in the South.

The survey also found that the voluntary sector is twice as likely as all others to have bonus schemes for their manual employees.

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