The demise of the "dead cert" reward

Johannesburg, 21 Apr 2005

The number of respondents who received 13th cheques and annual pay rises has dropped even further this year, possibly signalling the demise of the guaranteed reward.

The results of last year`s survey indicated that there was a growing trend to linking rewards with measurable performance, and this tendency shows up even more strongly this year.

The majority of respondents in this year`s survey - 82% of the sample - had their salary increases linked to performance, demonstrating the growing trend to tie performance more closely to the annual increase.

Only 42% of respondents in this sample are offered a guaranteed 13th cheque as a bonus. At executive level, this would be true for only 35% of participants.

[CHART]Morag Phillips, director at 21st Century Business & Pay Solutions, says: "It is interesting to note that although a higher proportion of employees are eligible to receive an incentive, a smaller percentage actually receive an incentive. This demonstrates the link to performance, whether determined by an individual or company measure. This reinforces the message that bonuses are not guaranteed."

"It is also interesting to note that the values awarded have increased when compared to the reported values from the 2004 sample of participants," Phillips says.

[CHART]The average salary increase given to respondents during the past year was 5%, with the common range reflected as between 4% and 10% as an increase.

[CHART]"The results here reinforce the focus on performance, although not always the only factor considered in increase determination. The incidence of a guaranteed increase is very limited," says Phillips.

Incentives or cash

[CHART]Phillips also notes that the majority of organisations review salaries in the middle of the year, between May and July. "However, within this sample, there are organisations offering increases in every month of the year," she says.

Over 61% of the sample are employed by organisations who remunerate on a total package approach. "This is a high percentage and is a trend that continues to grow in South Africa," notes Phillips. "There is a continued commitment to offer employees choice and flexibility through the total package concept, at the same time as containing open-ended liabilities from the employer point of view."

[CHART]Phillips adds that many companies offer long-term and short-term incentives other than cash benefits. The long-term benefits include share options, deferred compensation and rolling or "banked" incentives. Short-term benefits include vehicle benefit, cell phones, credit cards, entertainment allowances and medical aid. Very few companies go out of their way to offer child care.

The demise of the "dead cert" reward

The days of the guaranteed 13th cheque and annual pay rise appear to be over.

Incentives or cash