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With clients linking agency remuneration to performance and agencies seeking to keep fixed costs low, little wonder agencies are moving increasingly to incentive pay, whether through bonuses or other pay schemes.

As one agency executive puts it, "We don't skimp on raises, but when we are confronted with giving a lower pay raise or less bonus, we opt for less pay."

Virtually all agencies in the survey dish out bonuses, and 56% do so by predetermined formula, either based on profitability or operational goals. This is up from 51% in last year's survey.


Performance bonuses are not skewed to any particular agency size, although they tend to be slightly more prevalent in the East than elsewhere.

The West, a big advocate of raises, also is handing out the better bonuses. Such purse-loosening in both areas may be because the region is in rapid recovery after being the last to surface from the recession. The West's bonus levels are higher than its raises.


The West will lavish art directors with a bonus 15% of base pay this year. No other region is in double digits for that post. The West also leads in bonus granted account executives and media directors and is in a dead heat with the Midwest for creative director bonus.

Bonuses traditionally are tied to performance. And the performance bonus is beginning to move away from yearend payout to monthly if not weekly enhancements based on profitability returns and operational goals.

Agencies offer varied schemes, whether incentive pay by hours devoted to a particular business, by the generation of new business or by the profitability of existing accounts.

One executive in the survey notes his agency is about to inaugurate a pay scheme that links time to performance.

"Time is really what we sell and is what we own of our employees," says the agency general manager, referring to a plan to tie bonuses to staff time devoted to an account.

It sounds like punching in; hours and bottom-line movement will be closely monitored per account.

"Gone are the days when creative types float in and out," says the general manager.


Incentive schemes have a way of raising worker productivity, a fact discovered by a West Coast agency when it took its workers off incentive pay.

The general manager, creative director and account execs at INS Advertising, Portland, Ore., for several years received monthly bonuses based on performance. Bonuses also were given any staff member generating new business.

But this year, INS canned the scheme for account execs at the request of a new general manager. AEs were salaried.

"Everything slowed down," says President Barbara Bradshaw. "Now [the staff] just keeps clients at the same level and doesn't seek new business.

"We're looking at returning the incentives."

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