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In November 2015, Vivient Consulting and WorldatWork invited a sample of WorldatWork’s non-publicly traded members to participate in their second “Incentive Pay Practices: Privately Held Companies” compensation survey. Approximately 200 private, for-profit companies responded to the survey, representing manufacturing, consulting, professional, scientific and technical services, finance and insurance, media, software and retail trades. This compensation survey updates the original survey completed by Vivient and WorldatWork in 2013.
The new 2016 compensation survey research shows that short-term cash incentives and bonus programs continue to dominate the incentive-pay landscape as a vast majority of organizations use and rely on incentive-based pay practices to recruit, motivate and reward employees.
Vivient’s Bonnie Schindler reports: “While cash continues to dominate long-term incentives at private companies, we are seeing an uptick in the use of real equity in the form of stock options.”
Key Findings from the 2016 Compensation Survey for Private, For-Profit Organizations
- Between 2013 and 2015, the prevalence of short- and long-term incentive programs remained steady at private companies. Short-term incentives decreased slightly to 94% from 97%, while long-term incentives also decreased slightly to 53% from 56%.
- In 2015, almost 75% of privately held companies with a short-term incentive plan offered at least three programs.
- Annual Incentive Plans (AIPs), the most prevalent short-term incentive plan at private companies, are offered to employees at the exempt, salaried level and above at most organizations.
- At the 75th percentile, the majority of private companies increased their short-term incentive budgets to 12% of operating profit in 2015. They forecast an increase to 14% of operating profit for 2016.