This blog is about incentive pay program
Well, it's March 2005, and if your employer is on a fiscal year that coincides with the calendar (many do), you will most likely be receiving some sort of annual performance review. And with that annual review, you most likely are hoping to receive a base salary increase for 2005 and a bonus/incentive payout for your 2004 performance. The following information illustrates typical base salary increases and bonus/annual incentive target payouts
Most companies will award a base salary increase that is dependent on several factors, including job classification, your individual performance, your company's overall financial performance, and your company's salary structure. Assuming that you and your company have achieved target goals, and that you are relatively close to the midpoint of your salary structure grade, you can expect a raise between 3.3% and 4.1%. Specifically, typical salary increases for 2005 are as follows:
Bonuses and annual incentive payouts depend primarily on two variables: your job performance and your company's overall financial performance. Depending on your job, these programs can vary in complexity and payout. For example, if you are a customer service representative in a call center, your bonus might depend only on the volume of calls that you handled throughout the year. For this type of job, your company's financial performance might have little or no impact on your bonus/annual incentive payout.
Alternatively, if, for example, you are a marketing manager, your bonus payout might depend on not only your performance, but also the performance of your product, your product line, your department, your division, and your company as a whole.
Notice that, at the median, the customer service representative receives a 2.2% bonus, while the marketing manager gets an 8.7% bonus. Whatever your job title is, the main premise of a bonus annual incentive is that the payout is determined based on some type of performance. The common phrase for this with today's human resource professionals is "pay for performance."
As previously discussed, depending on your job and certain performance factors, your company might award a bonus/annual incentive payout. In many situations, companies will model and set payouts based on target amounts and desired employee performance. Assuming that your performance meets target standards, the following table illustrates typical bonus/annual incentive payouts (depending on your job category and base salary earnings range) for 2004 performance.
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