More Than Half of Organizations Paying Minimum Wage Affected by Regulations

Data-Rich Survey on Compensation Programs and Practices Includes Minimum Pay Rate Adjustments

September 14, 2021

Scottsdale, Arizona — WorldatWork’s 2021 “Compensation Programs & Practices Survey” shows that more than half of respondents whose organization pay at or near minimum wage say they have been affected by statutory changes at the local, state or federal level during the past two years.

About four in 10 (41%) of the 920 respondents said their organization has jobs in the minimum-wage range with 56% of those respondents saying they’ve been affected by changes in minimum-wage laws. However, 59% of respondents said their organization does not have jobs that pay near a minimum-wage standard.

The WorldatWork survey gathers information about trends in compensation programs and practices, focusing on the prevalence of base and variable pay programs, as well as common practices used to administer and communicate these programs in today’s workplace.

One of the survey’s main strengths is that it breaks down many categories of the data by organization size and industry, pointed out Sue Holloway, CCP, CECP, WorldatWork’s director of executive compensation strategy.

“This makes the data more relevant to the user,” Holloway said. “This is a survey rich in trend data. It is very comprehensive. When organizations are looking to change compensation plans, the data can help to guide their program changes.

Sample Findings:

  • 77% of organizations vary base pay increases between top and bottom performers, with bonuses (85%) being the most popular form of variable pay. Moderate variation (1.5 times average base pay increases for top performers) has dominated over the past several years and continues to be the most prevalent degree of variation in 2021 (39%), though it is losing ground to the rise in base pay increases that aren’t based on performance. This year, 12% of organizations are determining base pay increases on something other than individual performance, a 10-percentage point spike from 2018.
  • 16% of respondents say their organization used a ratingless performance review system in 2021, double the percentage in 2016. That’s instead of a more traditional system, most of which rate employee performance on a numerical scale such as 1 through 5.
  • 59% used individual incentives in their variable pay plan, up from 40% in 2018. Such a big jump suggests broader economic issues.
  • 41% said most of their employees do not understand their organization’s compensation philosophy. This despite the fact that 88% of respondents reported having a formal compensation philosophy – 62% written and 28% unwritten. When information about the pay program is communicated, it is most often through individual discussions with supervisors. That dropped this year, possibly because of pandemic-driven remote work with more communication via such tools as email and the company website.

About the Study

This is the sixth iteration of the Compensation Programs & Practices Survey, with the first survey launching in 2010. WorldatWork invited its broader membership and customer base to participate in an electronic survey on base and variable compensation programs, policies and practices. A total of 920 responses were received, representing organizations of different sizes and across multiple industries. Email invitations were sent directly to participants on April 26, 2021, and results were collected during a 15-day period. The survey has a 3% overall margin of error at a confidence level of 95%. Sample sizes vary by question.

About WorldatWork

WorldatWork is the leading global nonprofit organization for professionals engaged in the critically important practice of total rewards. We serve those who are responsible for cultivating inspired, engaged, productive and committed workers in effective and rewarding workplaces. We guide them in the design and delivery of total rewards programs with our education and certification; idea exchange; thought leadership; knowledge creation; information sharing; research; advocacy; and networking.

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