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![]() Variable Pay Considerations and Trends for 2008 As we approach the end of the year it is usually the time to assess Sales Incentive Plans, Sales Support plans along with Management Bonus Program of 2007, and to contemplate changes for 2008. Every one would like to have all their variable pay programs in place at the beginning of the year so that they are able to jump start the sales organization, support teams, and management with specific quantifiable goals, measurement scales, and payout calculations and payment schedules. Unless we get these plans into the hands of the employees early in Q'1 2008, they might be distracted and not put their full attention to the business. Typically the base pay portion of the total pay does not change too much from year to year but the variable pay can and this generates a lot of discussion around planning, measuring costs and whether the program is achievable. In general variable pay programs are becoming more predominant in most organizations throughout the world. They are becoming more formalized and less based on the discretion of a manager. The performance measures are becoming better linked to individual, group and organizational success. Organizations that use variable pay programs enjoy an effective competitive advantage in the marketplace, because their employees understand what is critical for the business to succeed and know they will be rewarded based on those achievements. When designing or modifying a variable pay program, one needs to keep it simple to explain three measurable elements. Otherwise, the plans may get diluted and the individual may lose sight of the key measurement principles. The most common measurements that are recommended are as follows:
Instead of continually ratcheting up base pay, more companies are adopting or expanding their variable pay programs, at all levels, to reward outstanding achievement without increasing fixed costs. If you are interested in having an independent assessment around your measurement systems, performance planning, management practices, culture values, and other measurable factors that are essential for success of your business, I would be happy to meet with you to further brainstorm. Each company has a unique set of reward standards, which is tailored to their specific needs and needs to be preserved. The net result should be to have high-impact variable pay programs that are leading edge to your competitors. |
Industry Trends Market Brochure Press Release - March 2007 Variable Pay Considerations and Trends for 2008 2009 Salary Trends Observation Trends |
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