Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, July 22, 1995                   TAG: 9507240060
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: JAY MATHEWS THE WASHINGTON POST
DATELINE: NEW YORK                                LENGTH: Medium

LOSE A PAY RAISE, GAIN A BONUS FOR GOOD WORK

The average American employer's habit of paying good workers a little more each year may be fading away, replaced by one-time bonuses, project incentives and work style changes, a national survey of employers has found.

The survey of 1,383 companies by Towers Perrin Co., an international management consulting firm, revealed 41 percent now offer some form of variable pay to non-executive employees, up from 35 percent in 1994.

Salesmen and top executives have long been accustomed to being paid in part by bonuses or commissions whose size depended on the business they brought in or the company's annual profit. Ordinary employees, the survey said, are finding such systems more and more a part of their pay plans.

Susan Rowland, a Towers Perrin principal, said companies are motivated by ``the need to focus employees on business goals, reward achievement of those goals, as well as control fixed payroll costs. Companies can no longer afford to have their payroll costs rising when their business results don't rise as well.''

The change appears to mean more uncertainty for U.S. workers, whom political consultants and sociologists see as already anxious despite widespread employment and relatively good pay.

The Towers Perrin survey, conducted in February and March, found corporate budgets for ordinary merit increases were at a six-year low. Employers said they cut merit increases by an average 0.4 of a percentage point below what they initially planned for 1995 and left those increases two- or three-tenths of a point below what they were in 1994.

The bonuses and one-time payments, although they may give employees more money than they earned the previous year, leave the base pay at the same level. This keeps the firm's payroll obligations low but makes it difficult for employees to plan financially.

``One concern is that more and more people will be earning less and less on a fixed, agreed basis,'' said Randall S. Schuler, professor of management at New York University's Stern School of Business. But it is also good for the economy, he said, that employees ``work hard and get rewarded for working hard.''

Seventy percent of the firms with variable-pay programs use only one system, most often incentives for special team projects or one-time bonuses for especially proficient work. Other popular choices were gain-sharing plans (offered by 19 percent of the companies), such as rewards for cost-saving suggestions, and profit-sharing plans that are not part of standard tax-deferred pension plans (18 percent).

Among those companies that reported the size of their awards compared to base salary, the average percentage payout per employee was 5.1 percent. The average dollar amount per employee was $2,500.

Sixteen percent said they provided extra pay for special skills and 13 percent had programs that give more money to employees who learn several different skills and help make production planning more flexible.