Variable compensation can be suitable for all types of organizations. But the type of variable compensation plans that best suit the context varies across organizations and even across employee types within an organization. Whether or not an organization adopts variable compensation should depend on the type of environment it operates within, its culture, its strategy and what its objectives are, as well as its ability to design and administer programs effectively.
The increasingly turbulent environment has caused many organizations to experience variable revenues. Whether or not an organization can best cope with this type of environment by making workforce costs more variable will have a major impact on its sustainability over time. Variable compensation can be an extremely valuable tool, but like any tool it must fit the need and be used appropriately if it is to produce the desired result.
An excerpt from:“Variable Compensation: Good Fit To Turbulent Environments” by Robert J. Greene, PhD
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