4 Types of Variable Compensation

Employees must now earn their pay increases. “There’s been a transformation in how employers think about rewarding employees,” said Catherine Hartmann, a principal at Mercer.

As earnings at many businesses improve, companies are spending more on variable compensation. Thus, next year workers might expect to see bonuses or other monetary incentives instead of merit raises.  Employers have greater flexibility to adjust pay based on their financial results by offering the following:

Bonuses:  Based on team or company performance
Commissions: Based on individual performance
Other Incentives:  Examples include incentive trips or more vacation days
Health Insurance:  With rising costs, some employers might consider covering health care premium increases in lieu of pay increases.