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We consider three main factors behind differences in wage rigidity across firms: the presence of a large component of bonuses; the extensive use of overtime hours, which are easier to adjust during downturns; and the actual ability to adjust the base salary of job stayers, due to high bargaining power, for instance.
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According to a recent study by a human-resources consultancy, not only are German executives the best paid in Europe, but the component of their bonuses linked to short-term targets is higher even than that of their counterparts in America.
The share of flexible pay component (the fraction of bonuses on total pay, a continuous variable ranging from 0 to 1).
Companies sell more when they remove caps on commissions; "ratcheting"—raising a rep's quota after a good year dampens motivation; and a pay system with multiple components (such as various kinds of bonuses and commissions) can engage a broad range of salespeople.
Second, the bonus component of compensation is explicitly tied to the fund's investment performance for 79.0% of sample funds.
11 To use bonuses as the performance-based component of wages, it is necessary to ensure that bonuses are actually paid based on workers' current performance.
In contrast, the performance-based component of pay, i.e., bonus, is important to induce a high effort level from workers in the current period, which implies a high bonus during booms.
We've heard from your feedback on Googlegeist and other surveys that salary is more important to you than any other component of pay (i.e., bonus and equity).
Compensation costs for investment banks like Goldman are typically close to half of revenues, but bonuses are just one component of that.
As explained in the previous section, we distinguished four categories of bonuses, namely fixed and variable annual bonuses as well as fixed and variable regular bonuses.
The data allowed us to explore the incidence of bonuses.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com