Times may be tough but bonuses remain

Cape Town - Although the economic environment remains strained, the latest Jack Hammer Corporate Survey reveals that companies are sticking with their bonus culture – and their obligations – even though company performance may be tepid.

Throughout the year, many have been faced with the prospect of a bleak festive season as news broke of tough trading conditions, and the chance that packages would be frozen and bonuses slashed. In SA, top staff have felt ongoing pressure on their packages as salaries and bonuses have taken a continued battering from the ripples of the 2009 financial crisis.

Asked whether their staff would be receiving a 13th cheque or bonus this year, 100% of the companies polled said yes.

The survey was conducted among South Africa’s top corporate employers and entities polled ranged from banking, wealth management and FMCG sectors, as well as government, manufacturing and insurance.

All respondents indicated that their junior and mid-level staff would be receiving end of year sweeteners, said Debbie Goodman-Bhyat, MD of Jack Hammer Executive Headhunters. “But what needs to be kept in mind is that many companies are contractually obliged to disburse 13th cheques regardless of performance,” she said.

“I would not say that the response indicates an easing of the extreme belt-tightening experienced over the past few years,” said Goodman-Bhyat.

“Rather, companies have recognised that to withhold the expected 13th cheque because markets are tough becomes a big issue with staff morale and ultimately productivity and staff retention.”

According to the survey, 75% of companies polled indicated that employees would receive end-of-year bonuses or 13th cheques, while bonuses linked to staff performance would also be paid should the company show a profit.

What was clear was that in all sectors, from investment banking to manufacturing, performance or profit share bonuses would be paid out to senior staff where individual and company performance targets were met – but that the expected sums are set to be smaller than they would have been prior to the global financial crisis.

“Since then, bonus sums have consistently remained weak. The bonus structures, formulae and ‘potential’ have not changed, but the amounts disbursed have in almost no instances reverted to pre-2008 highs,” said Goodman-Bhyat.

“Nevertheless, hope remains; because we still have executive candidates discussing their bonus ‘potential’ and the sums they used to receive 3 or 4 years ago when negotiating offers with a new employer. However the new reality has set in and a ‘new normal’ in terms of bonus payouts is emerging,” she said.