Tellabs raised salaries among IT workers by 5 percent to 15 percent after conducting its annual market analysis. Bonuses are in the 5 percent to 35 percent range, compared with last year's 5 percent to 20 percent range. Some workers, such as those with SAP and Unix administration skills, are seeing 50 percent salary increases. New IT employees are offered sign-on bonuses, and current employees get stock options.
Another difference is that stock options are starting to lose their luster. Instead, companies are turning to innovative bonus plans, which pose a number of advantages: They can attract, retain or motivate workers and -- because they are variable -- can help maintain payrolls through good and bad times.
"When times are good, the bonuses are great, but when times aren't, the company isn't committed to paying high salaries," says the e-business manager. Almost one-third of his own compensation is based on a performance bonus. "It's also a good way to keep people, because you have to stay a while to get your bonus, so it's easier to turn down other offers," he says. At the consulting company, bonuses range from 8 percent to 15 percent of an employee's salary, with the highest ones going to people with project management, XML, Java and Wireless Application Protocol/Wireless Markup Language skills.
The basic trend in bonuses is to drive executive compensation principles down into the ranks, says David Foote, managing partner at Foote Partners LLC in New Canaan, Conn. An example is a program that gives bonuses for performance over two or three years, not just annually, with a big bump in stock and cash.
"Companies are paying bonuses in creative ways, to contractors, consultants and full-timers to get the work done," Foote says.
San Francisco-based Embark.com -- a Web marketplace for students to interact with academic institutions and related businesses -- is also increasing its bonus pool.
"It's a change in our company's policy to be more generous in bonuses, and retention is one of the big factors," says Philip Joung, director of technology. Overall, Embark is increasing its performance bonuses, from approximately 5 percent to 10 percent of individual workers' salaries to about 10 percent to 15 percent. This is in addition to 20 percent raises for most positions this year.
But even with bonuses, many companies are careful not to throw their money around. "They are segmenting their worker populations into the 'will-performs' and 'won't-performs' to filter out the laggards," Foote says.
Certain jobs command higher bonus and salary increases than others. At Embark, the hottest positions are senior developers, senior project managers and database architects, Joung says. The most dramatic increase was for highly skilled database architects, with salaries jumping 30 percent to 40 percent.