Merry Christmas Mr Fat Cat

Dec 17 2003 by Brian Amble Print This Article

Over three quarters of British employers now operate a bonus scheme, according to a survey by The Work Foundation, but fewer than one in four spread them across the entire workforce.

With December the traditional month for end of year bonuses, one stereotype that appears to be true is that senior managers benefit most. They 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, not least the City. Our research shows that while there is a growing equality, senior management is still treated differently. The 'fat cats' are still getting fatter", commented 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."

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 seven out of ten companies asked do plan to introduce them or make changes to existing schemes.

Improving business performance and creating a direct link between employee and corporate performance are the most common objectives, cited by more than six out of ten employers. Conversely, encouraging teamwork and reducing absence are not widely reasons to offer a bonus.

Six out of ten 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.

The general maxim seems to be 'keep it simple' as the majority of schemes directly link performance gains to bonuses.

Perhaps surprisingly, only one in four employers operate a scheme for their sales force, while the voluntary sector is twice as likely as all others to have bonus schemes for their manual employees.