(MONEY Magazine) – Good-bye, raise. Hello, bonus. A compensation revolution is gripping corporate America. Companies all across the country--including 30% in one recent survey--are considering scrapping annual raises and instead offering bonuses that are based on your performance and company profits. Your company could very well be next.

Consider this: The average annual raise in 1995 is expected to be a measly 4%, the lowest in two decades and roughly a mere half of one percentage point above inflation. At the same time, more corporations are dangling cash rewards down the ladder. This year, according to benefits consulting firm Towers Perrin, bonuses will be awarded at 30% of the companies it surveyed, up from 25% in 1994. And according to a survey of 2,253 companies last year by the Wyatt Co., a Washington, D.C.-based human-resources consulting firm, 42% of companies plan to install performance-based alternative reward pay programs within two years.

The upside of bonuses, which range from 2% to 30% of annual pay, is that you can collect money, sometimes on the spot, for doing good work. The downside, of course, is that your base pay, on which benefits including profit sharing, pensions and life insurance are calculated, remains the same. And even when your boss likes you, you must re-earn your bonus year after year. "Companies now want to reward their employees based on the measurable value they add to the company," says Jay Schuster, co-author of The New Pay, a 1992 book on incentive-pay schemes.

To prosper in this new compensation environment, it's wise to master the fine points of your firm's compensation policies and to boost your visibility and skills. "It's no longer okay for.people to just do their jobs from 9 to 5," says Edward L. Gubman of Hewitt Associates in the January/February issue of the professional journal Compensation & Benefits Review. Today you must continually demonstrate that you're highly motivated, tuned in and contributing mightily to the bottom line. Here are your best strategies to get more pay:

Know your worth. Always be aware of how your salary ranks within your division, company and industry. In other words, are you being paid like a star or a schlump? To learn the pay standard for your position, read the want ads in the local newspaper or in established trade journals. Regional bureaus of the U.S. Labor Department also provide listings on average pay for most professions in your region. Then, armed with this information, talk to your company's compensation manager in the human- resources department. Ask about pay philosophy. "Some companies make it a practice to pay market rate, while others pay a percentage below and then make up the difference with bonuses or other perks," explains Steven Gross, a v.p. at the Hay Group in Philadelphia.

Think like a CEO. If your company is getting clobbered by market forces, this may not be the time to demand a sizable increase. On the other hand, if profits are soaring, you might be able to get a share of the riches. Also, stay abreast of company initiatives and promising launches. You might ask to transfer into a new division or volunteer for a short-term project that showcases your particular talents. Or if cost cutting is the name of this year's game, suggest procedures that would make your department more efficient. And, yes, if you hear the company president is giving a speech, get hold of a copy and read it. You'll be able to glean some writing on the company's upcoming walls. The employee newsletter and annual reports may also offer you potentially good leads you can act on.

Suck up to the boss. The juggernaut of layoffs--about 1.1 million over the past two years with no letup in sight--has just about buried the notion of job security. Indeed, an alarming one-third of Americans in a recent Money poll (see the particulars at left) said they were afraid to ask for more pay because of the "current job climate." But staying mum won't keep you safe. Rather, make an appointment at least once a year to talk to your boss about how your capabilities and goals help the company. Confides a New York City investment banker at Smith Barney whose total annual increase comes from her bonus: "It's not enough just to get a deal done here. You have to make sure everyone knows you got the deal done." At the end of every year, a month before the bonus pie is carved up, she sends a one-page memo to her boss listing each deal she negotiated during the year, including how profitably it turned out. Then she maneuvers to hold at least one informal conversation, say, on a business trip or over lunch, with a member of the bonus committee. "I know this sounds conniving," she concedes. "But that's what it takes. Bonuses are performance, plus politicking."

Ask for more. "Only a decade ago, it was seen as bad taste to talk about money with your boss," says Cathe Johnson, a director of organizational development and training at Motorola. "Today, it's okay to say, 'What do I need to do to get paid more?'"

Here's how to do it:

1. If you are underpaid and can demonstrate your value to the company, ask straight out for the increase that brings your base pay up to a level that's at least standard for your firm. Managers at large companies usually have less latitude about compensation than those at small firms. Nevertheless, in either case, make a direct request.

2. Don't give up if you're told that raises are capped or averaged this year. You can appeal to the big boss. But Joseph Kilmartin, a senior compensation consultant at the Wyatt Co., warns: "Go over your boss' head only if you've got a job lined up." A better alternative may be trying to tap into the bonus pool. Ask your supervisor about how your bonus is calculated and what it would take to earn a higher one. You may prefer to set specific goals with your boss that you periodically update. For example: Despite high praise for his work, Tim Walsh, the marketing director at Blessing White, a development consulting firm in Princeton, N.J., watched his annual raise sink from 10% four years ago to just 3% in '94. Each year he had been eligible for a 20% bonus but was still not coming close to netting the top amount. So Walsh scheduled quarterly meetings with his boss to establish priorities, and then backed these up with informal meetings twice a month. "By being more involved," says Walsh, "I've boosted my bonus from 12% two years ago to about 16% last year. It's much easier for me to show my boss what I've contributed because we are in constant contact."

3. If your company lacks a bonus plan or you've never been considered eligible for one, start acting as if you deserve one. After all, the more you do, the better your boss looks. Just remember to get your supervisor's approval before you begin revamping the database or putting in an extra five hours every night. "Some employees," cautions Johnson, "make the mistake of embarking on a project they think will earn them more without first consulting their supervisor. If they don't get the reward they expected, they end up discouraged." Most bosses will go to great lengths to keep a valuable employee satisfied. "It's expensive to replace good workers," says Kilmartin. "Consider the downtime and the cost to advertise or hire a headhunter. And the loss of one key employee can hurt morale in general."

Leverage your skills. So you've garnered a spectacular 20% increase and you feel like resting on your laurels for a fiscal or two. Don't. Take advantage of every training opportunity that attracts you. For instance: Is there an extracurricular class on cruising the Internet? Sit in. A special task force on quality? Volunteer. Look beyond the firm for training as well. Approximately 72% of full-time employees are eligible for their companies' job-related tuition assistance, yet only 7% take advantage of that valuable perk, according to the benefits firm Hewitt Associates. For instance, with many companies now poised to enter the global marketplace, think about a foreign language course.

There's yet one more pot you can stir in this new bonus stew, especially if you feel stuck in a current slot: Consider a move to the side. "Many companies now encourage lateral moves as a way to increase your skill base," explains Sherman Oaks, Calif. career consultant Beverly Kaye. You may not immediately see bigger numbers on your pay stub, but you can gain experience that may lead to a promotion. "Additional skills will translate into additional pay down the line," says Barbara Collins, a senior vice president at Drake Beam Morin, the New York City-based outplacement firm.

Finally, consider this clear-eyed advice from compensation insider Cathe Johnson: "It's not the company's job to take care of you anymore. It's up to you to steer your own career."

-Lesley Alderman

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