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 or do you want to spend? Defining this amount is fundamental for establishing a limit from the outset.
For a sales department, it's simple, as they will receive a bonus on their salary based on their sales volume; however, for the administration department, for example, which does not directly impact the company's turnover volume, you will need to establish a maximum variable bonus.
With all this in mind, include a line item in your budget for this purpose.
This is, without a doubt, the most complicated part, but together with your employees, you will be able to come up with objectives with which you all feel comfortable. To do this, we give you some recommendations:
Set ambitious, but realistic goals. You can follow the SMART method which states that good goals should be specific, measurable, achievable, results-oriented, and time-bound.
Take quality and productivity into account. If we only consider one, we run the risk of the other being negatively affected.
And always do it alongside your employee: ensure they agree, and that they feel it's possible and within their reach to achieve their objectives.
Be clear, concise and ensure there are no doubts about the company’s new pay system. Organise several sessions, if necessary, to answer questions or, if your company isn’t very large, meet with each of your employees to discuss their specific case.
With these three steps, you will have implemented a new variable remuneration system in your company. Afterwards, all that would remain is to establish a system to measure whether the set objectives have been achieved and to apply what has been agreed in that case.
With a variable remuneration system, you will achieve a motivated team and 100% focused on results.
