Does employee performance affect pay?
In its latest study, Emolument.com asked 2,200 employees if their performance had an impact on their remuneration. Results show that most of them think their pay is not a reflection of the quality of their work. We also note that bonuses have a limited impact perception of pay.
Does your performance impact your pay significantly?
Results by industry
|Rank||Industry||% who say their performance has a significant impact on their pay|
|1||Recruitment & Executive Search||42%|
|3||Construction & Real Estate||35%|
|4||Technology & Telecoms||34%|
|5||Transportation & Logistics||34%|
|6||Energy, Mining, Chemicals, Environmental||33%|
|7||Services, Tourism, Restaurants||33%|
|8||Consulting & Professional Services||32%|
|11||Charity & Not For Profit||29%|
|13||Pharmaceuticals & Biotech||28%|
|14||Media, Communication, Music, Gaming||25%|
|15||Insurance & Reinsurance||25%|
|16||Consumer Goods & FMCG||25%|
|17||Retail & Trade||25%|
|18||Public sector & Education||22%|
|19||Sports, Culture, Recreation||8%|
- A bleak picture: Not a single industry shows a majority who think their performance has a direct impact on their paycheck. Only 8% of those who work in the sports, culture & recreation industry believe the quality of their work will affect their salary.
- An efficient pay structure: The top three industries in this table all have well-established processes to measure and reward success: number of placements (recruitment), sales (real estate) or hours billed (law).
- What about finance? Finance firms often argue that their controversially high bonuses are the key to excellence. With only 30% of financial services employees thinking their pay is linked to their performance, it is an argument which does not convince.
Do bonuses impact employee pay perception?
|Bonus/No bonus||% who say their performance has a significant impact on their pay|
|Employees who receive a bonus||34%|
|Employees who do not receive a bonus||24%|
- Limited impact: Bonuses do not dramatically affect employees’ perception of their paycheck (34% of employees who receive a bonus say their pay is linked to their performance vs. 24% of those who do not receive one). Without a clear formula between performance and pay, as is the case in recruitment or real estate, employees do not tie bonus and performance.
Alice Leguay, Co-Founder & CMO at Emolument said:
‘If employees do not believe performance drives pay, what do they think does? Is it longevity, politics, being in the right place at the right time? Whatever it is, the belief that performance has little or no impact on remuneration is disheartening and cannot possibly encourage productivity or a thriving corporate culture. Lack of transparency when it comes to remuneration may be an aggravating factor fostering suspicion and negativity as employees are concerned that they may be earning less than their peers with no way of benchmarking their pay.’