Three Types of Variable Pay

К оглавлению
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 
17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 
34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 
68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 
102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 
119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 
136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 
153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 
170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 
187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 
204 205 206 207 208 209 210 211 212 213 214 215 216 217 

There are three types of variable pay that many companies use in combination:

Short-term variable pay, long-term cash variable pay, and long-term

equity variable pay.

Short-term variable pay, such as goal-sharing, win-sharing, gain-sharing,

profit-sharing, team variable pay, individual variable pay, and combination

plans, usually focuses on the achievement of business results within a oneyear

time frame. As a way of gaining more autonomy in directly rewarding

employees for outstanding achievements, many managers now lobby for

‘‘spot award’’ money in their budgets.

Long-term cash variable pay is designed to reward business results over a

sustained period of time, generally two or more years. Sustained performance

requires a long-term focus, not just the short-term view adopted by

so many companies in response to expectations of the investment community.

The longer-term perspective can also help keep key talent for longer

periods.

Long-term equity variable pay means stock options. By providing stock

options to all position levels in the organization, companies spread the feeling

of shared ownership, reinforce teamwork, and promote longer-term

retention.

The major attraction of variable pay is that it has the potential to fulfill

employees’ expectations of being paid for performance while allowing

businesses to make additional payouts only if they achieve business goals.