Variable Pay Playbook
In a tight talent market where employees have choices about where they commit their time and talent, variable pay is frequently used as a retention, recruitment, and motivation tool. Payscale’s Compensation Best Practices Report (CBPR) reveals that more than 78 percent of organizations give some type of variable pay. At a time when increase budgets are tight, organizations are starting to shift their rewards towards variable pay over fixed costs (base salary). Doing so allows them to really shell out the cash for their highest performers, but only if they use the right kinds of variable pay.
Variable pay considerations
Before you decide whether variable pay is right for your organization, it’s helpful to get a deeper understanding of the variable pay options and the cultural impact of pay choices. The way you design your incentive pay program can make a big difference on multiple pieces of your business, so it shouldn’t be an afterthought. Organizations are using variable pay programs to help them compete for talent, to combat turnover, and motivate all employees to higher levels of performance. But when you get it wrong, you might be wasting your compensation dollars and driving your employees towards undesirable behavior that hurts the long-term success of your
organization. In this whitepaper, you’ll get a deep dive on the following:
- Individual incentive bonuses
- Employee referral bonus
- Spot bonus or other discretionary bonus programs
- Hiring bonus
- Company-wide bonus
- Team incentive bonus
- Retention bonus
- Profit sharing
- Market premium bonuses
