Variable Compensation

Variable compensation is a form of pay that depends on performance or results rather than a fixed salary. It includes bonuses, commissions, or profit-sharing, and is designed to motivate employees to achieve specific goals or improve their performance. This type of pay aligns employees’ incentives with the company's success, rewarding them more when they contribute significantly or meet targets. Variable compensation can be an effective way for companies to incentivize productivity and reward high performers, while providing flexibility in managing overall labor costs.