Variable Pay In The Workplace

2202 Words 9 Pages
America is rooted on its ability to grow businesses and prosper. Basically, money is the blood in the body known as the United States of America. Ironically, it takes money to make money. Meaning that to uphold any business, money has to be used to create the foundation, and once the foundation is set, money is needed to keep the business circulating healthily. The main way to do that is to adamantly supply and cover the workers of the business, because they are truly the backbone of the entire operation. The role that compensation plays is essential in workplace because how workers are paid reflects their level of excellence on the job, and the future of the brand itself, which is in the hands of the employees.
Compensation is the output
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Unlike guaranteed pay, variable pay is directly dependent upon the employee’s ability to accomplish a task, meet a quota, or other variables that are dependent upon maintaining a particular level of performance or achieving a desired result. However, the employees within a variable pay system still have a set rate to which they are paid, but they have more room to earn more money. The most common forms of variable pay are seen as incentives or bonuses. Positions that apply variable pay are typically jobs that allow commission such as sales associates, car salesmen, realtors or jobs that allow workers to gain bonuses for their work, such as lawyers or senior members of corporate businesses. Bonuses are becoming more prominent in businesses and are taking the place of the traditional …show more content…
Raises are earned by staff showing consistent improvement in their performance, or gaining enough experience to earn more than the previously set wage. All in all, variable pay is most often seen in businesses and corporations that are competitive. That is because businesses want to attain a certain level of results that can expand their business and place them high in the race with their competitors, and by creating opportunities for staff to excel, so does the company. In a way, it is like a domino effect. Also, by not having a set rate for paying employees, employers have the possibility of saving money, and employees have the opportunity to really earn their pay by the use of their talents. Employees that like to earn their living by using their unique abilities often lean towards jobs that allow them to work on commission, earn bonuses, or a raise. Within variable pay exists the option of overtime. The ability to earn or have the option of overtime pay also falls under the category of variable pay, because workers are not on a fixed income rate. In a business, variable pay has levels. “At junior level, variable pay ranges from 10% to 15% of fixed pay. For sales people, variable pay plus sales incentives can range from 30% to 40%. Sales incentives aren 't defined as variable pay as they are commissions. At middle level, it ranges from 15% to 30% and at senior levels; it is

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