All about Variable Compensation
Variable compensation is the part of the employee’s pay that can change, unlike the fixed pay component. It includes bonuses, commissions, various cash compensation, and incentives and is given according to the performance of the employee. Variable pay is given to employees based on the business objectives they achieve. On the other hand, the base salary of an employee remains fixed, regardless of whether they achieve the additional goals.
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What is Variable Pay?
Variable pay is decided according to the overall performance of the employee, considering multiple merits. It is generally a percentage of the employee’s fixed pay. The employees are typically paid for the success of their team, company, or their own. Variable compensation can be given in advance as incentives, or in the form of a bonus after achieving an objective. Many employers tend to compensate their employees with variable pay, which can be in the form of money, stock, or even paid time off from work.
Who will get Variable Compensation?
Variable pay is generally a part of fixed wages. Employers offer their employees variable compensation based on the performance of a person, team, or even the business as a whole. Some employees have greater chances of receiving variable pay, such as those in leadership and sales roles.
What are the Differences Between Fixed Pay and Variable Pay in the Salary Structure?
Let us understand the basics of fixed and variable pay and the importance of both. Fixed pay is the amount of salary that remains fixed and is paid to an employee at the end of every month. On the other hand,…(more)
