VARIABLE PAY
Variable Pay
Variable pay is an additional form of compensation or payment provided to employees by companies based on exceptional performance, meeting specific targets, or achieving predetermined goals. It is often disbursed quarterly, semi-annually, or annually, taking the form of bonuses, incentives, or other monetary rewards beyond the regular monthly salary. Organizations frequently utilize goal-setting methods, such as Objectives and Key Results (OKRs), to determine variable pay based on individual or team achievements.
Types of Variable Pay
- Performance Bonus for achieving predetermined performance targets.
- Sales Commission for sales employees based on a percentage of sales revenue generated.
- Referral bonuses are given to employees for recommending candidates who are subsequently hired.
- Profit Sharing compensation is linked to a percentage of the company's pre-tax profits, distributed when the company is profitable.