Bonus-based pay gains traction in U.S. workforce: Alexander Group survey
NEW YORK, UNITED STATES — A growing number of American companies are adopting bonus-based pay models, tying a portion of workers’ compensation to performance metrics.
This shift reflects a broader trend in compensation strategies aimed at boosting productivity and managing payroll costs.
The rise of incentive pay across industries
According to a 2024 survey by revenue-management consulting firm Alexander Group, 28% of over 300 companies surveyed reported incorporating incentive pay into new roles. This trend is reshaping compensation packages for various professionals, including accountants and human resource managers.
Traditionally, employees would receive a fixed salary supplemented occasionally by an annual bonus. However, in an effort to maximize productivity amid escalating payroll costs, employers are increasingly turning to monthly or quarterly bonuses tied to specific performance targets. This approach aims to motivate employees by making a portion of their compensation contingent on achieving predetermined goals.
Employee perspectives on the new pay model
Reactions to this shift are mixed among the workforce. Some employees welcome the opportunity for higher earnings, while others express concerns about income instability.
Hannah Brown, a 32-year-old chief of staff at business software company WalkMe, exemplifies the positive outlook. Brown is eligible for a quarterly bonus of 11% of her salary, with half dependent on her department’s performance and individual goals set with her supervisor.
“There’s absolutely risk, but in my experience there’s been more reward,” Brown told The Wall Street Journal.
Conversely, Miriam Gershenson, an experienced HR professional, declined a job offer in San Diego where the proposed salary was 10% less than expected, with the difference made up by a performance-based bonus.
“It felt like the rug had been pulled out from underneath me,” Gershenson recounted, emphasizing that base salaries should reflect skills and meet financial needs.
“Anything above that, if I earn it—fantastic. That’s why it’s called a bonus,” she added.
Companies navigating the transition
Companies implementing these incentive plans are carefully designing them to ensure fairness and motivation. WalkMe offers a structured bonus system where employees can earn up to 120% of their target bonus based on individual and company performance.
Gong, another company embracing this trend, introduced a new bonus plan for customer-success managers, linking a significant portion of their pay to customer-renewal rates. Simon Frey, head of customer outcomes at Gong, stresses the importance of clear communication and gradual implementation in such transitions.
“Especially with a change that involves dollars, there are more risk-averse people who really want to understand all the implications of putting more skin in the game,” he explained.
Balancing risk and reward
The shift towards performance-based pay is seen as a method to foster greater achievement and adapt to economic pressures. However, it requires a delicate balance to ensure employees feel secure and valued.
Shira Shriki, a procurement manager at WalkMe, appreciates the transparency of her company’s bonus structure. “The potential to get more is higher than at previous companies,” Shriki noted, adding that the clarity and attainability of the bonus targets are crucial.
Ultimately, the move towards performance-based pay is seen as a method to foster greater achievement and adapt to economic pressures. However, it requires a delicate balance to ensure that employees feel secure and valued.
