Jun 29, 2022

Variable Pay For Performance Plans Success Criteria

Variable Pay Performance Plans

Variable Pay For Performance Plans

Variable Pay For Performance Plans are also known as performance pay. Which is used to recognise and reward employee contribution, who have worked above and beyond their normal job requirements, towards company productivity, profitability, and quality. Variable Pay For Performance is often based on two main factors, the employees own performance and company's performance. So, we see most of the schemes evolved by companies have a target based, and actual payout based on the completetion of that targets. Variable pay for performance is the extra money given to the employees in any organisation, except the fixed pay salary and cash allowances, retirals statutory pension such as PF, gratuity, benefits and perquisites and Esops, stock options and restricted stock units.

Criteria For The Success Of Variable Pay For Performance

Compensate for Individual Performance.

Piecework Rates.

Standard Hour Plan.

Merit Pay.

Performance Bonus.

Sales Commission.

Pay For Team Performance.

Profits sharing.

Team Awards and Bonus.

Pay for Organizational Performance.

Employee Stock Option Plan (ESOP).

The success and failure of the variable pay for performance plans depend on the middle managers, who will make or break your variable pay program. You should involve managers in variable pay program design and effectively convey the benefits of a well-designed variable pay program, which can positively affect the organization’s in various ways and also improve the Morale, Productivity, Quality, Customer service, On-time performance, Work methods and communication. Comprehensive Variable Pay programs are the critical success factors for the organizations, who support a performance reward framework. Variable Pay For Performance Compensation policies and programs must be aligned with the organization’s strategic objectives, and the top level management must allow the variable pay program. Variable Pay For Performance Compensation must be both internally equitable and externally competitive. The variable pay performance program must deliver what is promised, on time and fairly payments. Variable Pay For Performance payouts must be aligned with performance criteria achievement. Variable Pay For Performance opportunities must be motivate performance. Timing of Variable Pay For Performance payout allocations should be as close as possible to the qualifying event.