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Contact: Marty Mordarski, Director of Research & Membership, mmordarski@ercnet.org

Press Release
Wednesday, April 16, 2008

Cost of Living Pay Increases Still Second to Incentive Pay

Cleveland– According to the results of the recently published 2008 ERC Pay Adjustment & Incentive Practices Survey, an annual survey reporting local pay adjustments, projections, and incentive and bonus practices conducted by ERC, Northeast Ohio organizations report more use of incentive pay increases versus cost of living increases.

In the survey of 139 Northeast Ohio organizations, 78% of respondents had an incentive or bonus plan in place at their organization. Among these respondents, 82% of manufacturing organizations and 71% of non-manufacturing organizations reported having a plan. This compares to only 16% of respondents that provide cost of living increases to at least one group of employees (most commonly exempt supervisory, professional, and management positions).

Among the most popular incentive plans in place were annual bonuses, profit sharing, individual incentives, and spot/achievement awards, and the majority of organizations (over 50% of organizations) pay out eligible plan participants annually. In addition, the average percentage of pay that incentive/bonus pay represents increased from 2007 across all position types, suggesting that incentive/bonus pay is increasingly making up a larger portion of employee compensation in 2008 than it has in previous years.

Table 1: Average Percentage of Pay that Incentive/Bonus Pay Represents - 2007-2008

Position Type

“Incentive pay plans are being used more frequently in workplaces than cost of living increases as organizations continue to be cautious when offering increases to all employees, which increase their fixed costs and may not contribute positively to the organization's overall performance," explains Amy Petrus, Senior HR Consultant at ERC. "Using incentive and bonus pay ensures that employees are rewarded for only high-level performance that is benefiting the organization. It also communicates the importance of employee performance."

ERC is Northeast Ohio’s largest organization dedicated to HR and workplace programs, practices, training and consulting. The organization also hosts NorthCoast 99 and sponsors the ERC Health insurance program. For more information about ERC, check out www.ercnet.org.

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