Better Rewards for Front-Line Workers

By Crane, Joyce Pellino | Workforce Management, August 2004 | Go to article overview

Better Rewards for Front-Line Workers


Crane, Joyce Pellino, Workforce Management


Fast-growth companies pay that way

They strongly believe in variable pay and invest in employee training

PAYING HIGHER WAGES to low-level workers who deal with customers, such as bank tellers and baggage handlers, makes good business sense. Hewitt Associates reports in a recently released study that companies that give higher rewards to lower-paid employees, invest in the workforce generously and don't tie monetary performance rewards to cost-cutting measures tend to be faster growing and to benefit more from performance-based pay plans.

Designed to gauge the correlation between revenue growth and variable-pay plans, the study finds that companies with slower growth and integrated cost-saving measures benefit less than those with a consistently high growth rate and no cost-containment measures. The report shows that companies that don't tie cost reduction to growth and instead measure success against revenue and share price do far better. Slower-growth companies, on the other hand, put fewer resources into performancebased programs, budgeting 30 percent less per employee for the variable-pay plan than high-growth companies.

Paul Shafer, a Hewitt business leader, says the report indicates that high-growth companies are more committed to variable pay and view it "as a more significant element of total compensation. …

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