Variable Pay Plan Assignment

1. What factors will contribute to a successful variable pay plan ?
2. Should performance incentives for teams be equal for team members or based on individual performance.

SAMPLE SOLUTION

Variable pay plans are an increasingly useful and popular mode of compensation in the contemporary business world. The pay plans are made up of distinct compensation techniques. In the broadest sense, it includes annual bonus or incentives, group incentives, technical achievement awards, profit-sharing plans, individual incentive plans, gainsharing, lump-sum payments, and rewards for newly acquired knowledge and skill (Beardwell & Thompson, 2014). The method aims to improve on-time performance, productivity, morale, customer service, quality, and work practices.

Factors That Contribute to Successful Variable Pay Plan

Various factors contribute to a successful variable pay program in different businesses and professional fields. The program is normally designed by the middle-level managers to encourage the operations managers and the other staff members to improve their performance in addition to ensuring that the organization recognizes hard work.

Performance Must Be Measurable Performance criteria to be used should be realistic, objective, measurable, and clearly stated in writing or recorded. The criterions should be explained in terms of specific measures that the management will use to appraise performance (Howell, 2014). To formulate specific measure(s) for each employee, the organizational management….