Looking to Benchmark Pay?
SUMMARY
Variable pay has produced more change in global compensation plan design than any other form of compensation with well over 80 percent of companies now using some form of variable pay. Variable pay complements our fluctuating economy in this current marketplace. An effectively designed incentive plan will lower labor costs during downturns in the business and will pay at or over plan when the business prospers. Variable compensation is now a regular part of a compensation package.
A business culture that supports its employees and empowers employees and teams to affect organizational performance is an excellent fit for a variable compensation plan. Top management support is critical to a successful variable compensation plan. An effective plan also needs to be “simple” to understand.
An incentive pay plan’s goals should be an attainable and reasonable stretch for an organization. Remember, base pay is typically paid to perform required essential responsibilities. Incentive pay plans are used to “incent” attainment of individual, group, division, and/or organization-wide goals and objectives.
An effective variable compensation plan will motivate and engage employees to drive the attainment of organizational results. It’s an excellent opportunity to significantly influence the overall performance of a business.