Good morning, Ladies and Gentlemen. Welcome to the People Processes podcast where we dive deep into the tools, laws and yes policies and processes that you need to scale and grow your people processes. I'm your host, Rhamy Alejeal and I'm the CEO of People Processes. My company helps organizations all across the USA streamline, optimize, implement, and revolutionize their HR operations. We've helped hundreds of companies and thousands of HR leaders across the world get their people processes right.

Today, we're going to take a look at a new study that's come out. A survey that says, the pervasive use of short term incentives among private employers is now at 99%. We are talking about what that is, why it's important and why if you are one of the smaller private companies, you need to be taking a look at it too. Before we go deep, I want to ask you to please subscribe to our podcast. You can find us on iTunes, Google podcast, Spotify, Stitcher, pretty much any podcast or of your choice. You can also subscribe at peopleprocesses.com which will give you exclusive subscriber only content. Okay. Let's dive right in.

Short term incentives is this, the use of it across almost every larger size private employer shows the desire to reward employee performance and compete for talent in a tight labor market. Even nonprofits and government organizations, 68% of them make use of short-term incentives. These are the two of the primary findings caption. The 2019 incentive pay practices, privately held companies and 2019 incentive pay practices, nonprofit government organizations which were conducted by worldwide work in partnership with compensation advisory partners. These surveys go all the way back to 2007 and have now run every year. Some of the key findings in this report is that spending on STI reflect 6.5% of all operating profit at median up from 6% or down from 6% in 2017 and up from 5% in prior years.

So 6.5% of operating profit at medium, up from 6% in 2017 and 5% in prior years. Got my columns off wrong. Companies are allocating more to reward, attract and retain talent. Let's talk for a second about what an STI is. A short term incentive. That's basically a bonus tied very tightly to a specific project, a KPI, a weekly, monthly, quarterly project. It's not an annual bonus or it may be an annual bonus but it's not something based on like long-term company profitability like equity. Like large companies a lot of times offer stock options. Those are example of a long-term incentive. Short term incentives are, Hey look, we've been this year or this quarter or this month you've got this project done, this job, we're going to do a bonus. And if you look across larger privately held organizations, now 99% some method of that short term incentive and end the nonprofits 68% and small government are using it is blowing me away. Annual incentive plans are the most common type of STI. Those are at 86% compared to spot awards. Project bonuses as firms seem to be consolidating their STI spending unstructure. Structured annual incentive plans that can incorporate company-wide financial metrics and other objectives rather than it being that more project-based. There is an uptake in long-term incentive plan, 62% versus 54% in 2017 which means that they are as a lot more people who are offering equity or profit sharing match over the long-term, those kinds of things.

One of the most compelling takeaways of the 2019 survey is the increased use of LTI plans by private companies said Sue Holloway, CCP CCP director of an executive compensation strategy world at work. She went on to say private companies realize they need this total rewards component to up their game to compete with public companies for top management talent. Regarding the nonprofit sector, three out of four, 76% nonprofits use STIs in some way or another. For these organizations, STI spending is around 2% of operating budget at meeting median. So take all of your...