Variable compensation. Over the last decade many executives have benefited from the change in the way the companies compensate its managers, directors and presidents. The variable compensation concept that, for decades, was connected to the minimum wage is no longer attached to the companies need of different sizes and sectors. Into this new process people are struggling to give better results, because part of it will be reverted into benefits. But what are the most popular types of variable compensation in Brazil?
This kind of compensation represents the recognition not only for the work, but also for the extra effort that the employee made for the company. The compensation can be divided into fixed and variable, and the compensation types can vary from salary, bonus, stock options and others income types. The variable remuneration is the reward for the effort and it varies according to the performance of each employee or the company as a whole. and can be linked to the goals of a period.
It is possible to identify the employees who contributed for the result through a performance management process. A common way for companies to conduct performance measurement is through performance indicators or KPI’s, this way the company’s goals are broken from strategic to operational and distributed among employees.
The incentives can be of short or long term. Incentives of short term are bonus from the goals compliance stablished for payments during the maximum period of one year, such as PER. The long term, are payments made in options to purchase company shares. In this post we will talk a little about the main differences between the most used programs of variable payment, check out:
To develop variable compensation polices is a great path for companies that wish to leverage their results, but it is also dangerous if the process is not executed with the appropriate attention. The strategy of compensation must reflect the company culture and consider its values, vision and business model.
The variable compensation has been working for both companies and employees because they see value at this system, it means to be recognized when the plan works and have the financial recognition of it. For a success implementation it is important to have focus at the final goal of the company and stagger measurable objectives.
Mereo helps to structure the variable compensation program of its clients, following the meritocratic principles and respecting an unfolding goals system. Transforming the team work into a priority seeking for the achievement of better results. Contact us and get to know us better!