Variable pay scheme.

Variable Pay Programme By + Introduction Variable pay is bonuses rewarded to employees by employers for achieving certain set goals in an organization. This pay is given depending on individual or groups performance. Variable pay provides a tangible reward for employees and encourages them to work hard and more efficient. Variable pay is given in a number of way. It includes annual incentives, individual incentives, gaining shares, and payments for newly acquired knowledge and skills.

Variable pay in an organisation is used to motivate employees to perform effective in their line of work. This is a type of incentive to workers (Belcher, 2006).

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In recent time variable cost should be critically understood before it is adapted into an organization. Variable should be designed in a way that it supports and motivates all levels of the organization. Mostly variable pay are given to specific individual or group only while the whole production and processing process involved different level of an organization. This may cause demotivation leading to negative performance. In order to ensure variable pay involves all levels of organization, overseers who are tasked with the assessing of performance should be trained on performance evaluation for the whole organization levels (Peck, 2007).

Factors like salaries of different professionals in an organization should be considered before Variable pay is given. Different professionals in a company are paid salaries that vary from those of another profession. Professionals who are paid a lot of salary compared to their counter parts cannot be motivated or demotivated. This is because their value of salary is much more than their partners even when variable pay is added to them. Therefore in a company when comparing two professions e.g. the system engineers and sales person, there is little or no impact when one profession is rewarded because they are different (Hynes, 2002).

The role of variable pay in organizations is to promote friendly completion among the workers. Competition in an organization will lead to good performance which will determine the employees variable pay. A steady competition will exist in an organization when employees are well motivated and have friendly environment. However, in some cases variable pay may lead to fierce competition which will cause tension and disrupt working relationship among colleagues. This mainly occurs when employees disclose their variable pay to colleagues. Organization can prevent fierce competition by enforcing strict policies that prohibits discussion of variable pay (Peck, 2007).

The role of variable pay is ton enhance good performance in organization. Variable cost is a way of motivating workers to increase their performance. Through rewarding of good performance in set goals by organisation there will be more hard work and commitment of employees thus improved performance in different sectors of the organisation (Bourgeois, 2011). However in an organization employees performance should not be governed only by variable pay. Organizations should not view pay as the only solution to improve employees performance. Employees need must be handled so that variable pay has a meaning in motivating the workers. Good management play a big role in motivating employees too


Belcher, J. (2006). How to design & implement a results-oriented variable pay system. New York: AMACOM.

Bourgeois, A. (2011). A small business assessment of workers compensation. Toronto, Ont.: Canadian Federation of Independent Business.

Hynes, D. (2002). Variable pay in unionized environments. Ottawa: Conference Board of Canada.

Peck, C. (2007). Variable pay. New York, N.Y.: Conference Board.

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