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Last year, the bonus pool at 58% of companies was expected to match the 2023 incentives rate, according to a survey by Gartner. The 2024 study (surveying 64 total rewards leaders) found that 11% of organizations planned to increase their short-term incentive budgets, while 6% expected to decrease.. Nearly a quarter (22%) hadn’t made a decision.
Bonuses in the financial services industry were expected to soar anywhere from 5% to 35%, the best performance since 2021, a report by Johnson Associates found.
“The economy was much better, and then markets were up dramatically,” said Alan Johnson, the company’s founder, explaining why bonuses were expected to surge. “I think people were expecting that, with some degree of probability, that it would be a lot worse.. That didn’t happen, which was a nice surprise.”
Some sectors in the financial services industry fared better than others. Those working in debt underwriting were expected to receive bonuses of between 25% and 35% because business has been so strong. On the other hand, bonuses for those working in real estate were expected to be flat due to slow activity after years of tremendous growth.
And while workers overall weren’t expected to see huge increases in their bonuses, at least most of them received one. The Gartner survey found that 42% of companies planned to give bonuses to between 80% and 99% of their employees, while 13% of organizations planned to grant bonuses to all of their employees.
Augustus Vickery, a director in Gartner’s HR practice, said that one reason the bonus pool at most companies was largely the same is that employees liken lower bonuses to pay cuts.
“Almost all the companies we work with are very, very reluctant to cut anyone’s pay,” Vickery said.
Vickery said that he expects more US companies to develop better bonus strategies in 2025 as part of the movement toward pay transparency. He said some industries don’t have clear criteria that employees must meet to receive incentive pay. Another problem is that managers often don’t want to differentiate among their reports so that top performers get recognized while poorer performers get nothing.
“All managers want to give their people something,” Vickery said.
