variable pay

Variable pay refers to compensation that varies based on performance rather than being a fixed salary. It can include bonuses, commissions, and profit-sharing, incentivizing employees to reach specific goals or contribute to company success. For example, a salesperson might earn a base salary plus a commission for each sale made. This approach aligns employees' interests with the organization’s performance, encouraging them to work harder and achieve better results. Variable pay can motivate higher productivity and reward exceptional contributions, making it an important aspect of many compensation structures.