After two years of painful payroll reductions, there’s enough light at the end of the recessionary tunnel for some employers to begin considering pay raises.
In many organizations, pay hikes will come in the form of variable compensation plans. Properly implemented, they can drive productivity while also controlling the fixed costs associated with salaries and hourly pay. (See “3 variable pay trends help weather recession”.)
But in a volatile economy, implementing performance incentives and bonus plans that motivate employees and avoid windfall payments is easier said than done. Experts say two tactics can help HR pros create variable pay plans that strike a balance between risk, reward and fiscal stability.
1. Set a sliding scale
Base variable compensation on (register to read more)relative to a quantifiable baseline target. Some examples: 10% waste reduction, 5% revenue growth, 10 or fewer errors per week, 20 or more cal...