Steps to set up a variable wage in your company
Finding the right formula to fairly compensate employees for their work can sometimes be difficult. Perhaps that's why more and more companies are opting to establish variable salaries which take into account the worker's situation and also his or her performance.
Salary is a critical issue in a person's working life. For this reason, it is often a sensitive issue between the company and the employee. However, a target-oriented and mutually agreed variable salary policy is completely neutral and very effective.
Installing this model in your company is simple, requiring only three steps:
In other words, how much can you or do you want to spend? Defining this amount is essential to establish, from the outset, a limit.
For a sales department it is simple, because they will get a bonus in their salary according to their sales volume; however, for an administration department, for example, which does not impact the turnover of the company directly, you will have to set a maximum variable.
With all this in mind, include a line item in your budget for this purpose.
This is undoubtedly the most difficult part but, together with your employees, you will be able to come up with goals that you all feel comfortable with. To do this, here are some recommendations:
Set ambitious but realistic goals. You can follow the SMART method which states that good goals should be specific, measurable, achievable, result-oriented and time-bound.
Consider quality and productivity. If only one is taken into account, there is a risk that the other will be negatively affected.
And always do it together with your employee: make him agree and make him feel that it is possible and in his power to achieve his goals.
Be clear, concise and make sure there are no questions about the company's new remuneration system. Organise several sessions, if necessary, to answer questions or, if your company is not very large, meet with each of your employees to discuss their specific case.
With these three steps you would have already implemented a new variable remuneration system in your company. After that, all that remains is to set up a system to measure whether the objectives have been achieved and to apply what has been agreed in that case.
With a variable remuneration system you will achieve a motivated and results-oriented 100% team.
