Study shows higher pay equals better performance

Companies know that they need to make investments in order to see their money grow. That principle applies to personnel as well – training, managing and using better incentive compensation techniques result in more and better output. In order to get the maximum performance out of staff members, businesses need to put more into their workforce retention and engagement plans. According to a Hay Group study, that can be as simple as offering them more money.

The 2012 CEO Compensation Study, released by The Wall Street Journal and the Hay Group, showed that pay for employees went up slightly in 2012 compared to 2011 survey results. The study examined how much top-performing leaders were rewarded for their efforts, finding that those with median corporate boosts received about 5 percent incentive pay for their efforts. Productivity was acknowledge and praised across the board, with all personnel citing financial incentive compensation for their work, but those who were among the elite movers and shakers in their organizations did see better awards.

The point many firms sought to get across with these incentive compensation management programs was two-fold. On the one hand, offering money to personnel for doing better jobs was a major contributing factor. Simultaneously, these programs also help show investors that leadership is making an effort and putting a solution in play that will help increase the likelihood of success for the coming months and years.

"Companies sought to make their pay programs more attractive to shareholders in 2012, structuring their executive compensation plans to clearly demonstrate alignment between pay and performance," said Irv Becker, the principal practice leader on the study for the Hay Group.

Cuts to perks
Other forms of benefits and corporate perks saw heavy cuts across the board, the Compensation Study found. The majority of private travel options remained intact, with nearly two-thirds of entities reporting these kinds of options. Since businesses already own these resources, it's easy to continue offering them to personnel. On the other hand, tax breaks and similar financial bonuses declined by 13 percent from the previous year's reported amounts, showing that companies are willing to offer more pay to staff members in return for peak performance, but that businesses may not be able to afford other methods of compensation.

By reinforcing that firms have plans to help them meet financial and performance goals, entities can encourage more investors to fund their projects and buy into their operations. Incentive compensation strategies show that companies know how to motivate personnel and get better output from them.