Employee incentive trends signal patchy biz confidence: Survey
New Delhi: Trends in short-term incentives for employees, based on annual performance of companies, signal a patchy business confidence in most parts of the world including the Asia-Pacific region, says a new survey.
Short-term incentives (STIs), an important part of remuneration package for key employees and senior executives, generally reflect the overall performance of a business.
Global HR firm Mercer has said that STI trends indicate a "weakening in confidence for companies in Asia Pacific, Latin America and North America".
The conclusions are based on data garnered from over 7.6 million employees worldwide.
"... If a company is predicting that it will pay out less to executives in 2012 than it did in 2011 - as our data shows is happening in certain regions - it indicates that companies expect their financial performance to be worse in 2012 than in 2011," Mercer's Asia Pacific Rewards Leader Hans Kothuis said in a statement.
In India, part of Asia-Pacific region, the percentage of employees receiving STIs fell to 73 last year from 80 in 2009. As per Mercer data, the share of such employees 75 in 2010.
"In 2010, companies in Asia-Pac predicted STI payouts for 2011 to be 22.2 percent, yet actual payments were higher at 23.3 percent. This reflected economic confidence in the region.
"In contrast, predicted payouts in 2012 are expected to be 22.1 percent suggesting a more cautious outlook," Mercer said.
Kothuis noted that many companies are shifting more employee compensation that relies more on variable pay, increasingly linking it to company performance.
The trend is mainly on account of companies looking to stay within tight budgets and effectively motivate their skilled workforce, he added.