BONUSES COURT PERFORMANCE: BUT POWERFUL ECONOMY MAY MASK INTENTIONS

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Bonus pay took another step this year to tie agency remuneration schemes to performance pay. The litmus test is whether this continues in less rosy economic times.

The client is the source of this inspiration. Marketers increasingly are linking agency pay to performance, so it stands that agencies are permitting this to trickle down into their internal operations.

Bonuses are stronger this year than ever, no doubt the product of a strong economy that has invigorated agency billings and profitability, and 40% of agencies surveyed hook bonuses to predetermined formulas, usually profitability.

SALARIES AND MERIT MIX

Abetting bonus's leadership in tying compensation to performance is a slowly emerging tendency to tie salary raises to merit. This seems almost old-fashioned in today's economy where salaries only are allowed to creep incrementally to hold the line on fixed costs.

One-third of the agencies in the West surveyed cite "warranted/earning and merit" as the basis of granting salary increases. Though a West Coast phenomenon at the moment, it could move elsewhere, where only 10% of agencies tie merit to salaries.

In sheer size, bonus levels for the top posts look like those pay packages corporate compensation committees haul out for captains of industry: 47% of an agency CEO's base pay; 36% of a chief operating officer's; 17% of a chief financial officer's; and on down to 8% for account execs.

Shops employing 11 to 30 staffers and 51 to 75 offer the better bonuses while smaller shops (below 10 employees) offered less at the top but more at the bottom; art directors, copywriters and media directors in these shops receive higher than average bonuses.

The Northeast and the West basically challenge each other in dishing out the top bonuses for all positions.

Beyond the bonus and base pay schedules is compensation in the form of awards, usually reserved for VP-manager level and above. These are largely companywide awards based on financial success. Some 60% to 70% of surveyed agencies provide such awards.

ONE-TIME PAYMENT

Another popular award is the one-time payment (other than for longevity), handed out by 50% of those responding.

Still, there is no flood-gate mentality toward extra compensation beyond salary, bonus and awards. Few agencies responded to the survey question seeking new compensation forms adopted for the first time in 1996 or 1997.

Of the few that adopted new schemes, stock ownership and group productivity were

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