Performance-based or performance-related pay? Variable remuneration models fulfil a variety of functions: you bind professionals to the company, the employees participate in the success achieved by them, create flexibility and ensures the alignment of the work results on the business objectives. For this purpose, it is important that the remuneration model takes into account performance – and success-oriented dimensions. The value creation as a legitimate request of the employer stands on one side. Variable components of remuneration can only reach the payout when facing these relevant achievements of the concerned employee. Success-oriented compensation based on value creation only if an above-average value was achieved, even an above-average wage may be paid. Otherwise, the variable remuneration for the company would be economically unfeasible. From this perspective is preferable to performance-related pay, which is based on the value of the results, give.
Cold calls time. He edited his region intensely, but the revenues are modest. Seller B, however, uses external events like extended Cafe visits, phone reluctant to “cold”, also likes early breaks to go to the golf course and draws yet bold orders to land. While A characterized by hard work, effort and high performance and unfortunately still moderate success, it is exactly the other way around at B. Variable pay: benefits combine a strictly success-oriented compensation system distribution, would get only the B A blank would be. It is likely that in this case would reduce its efforts in the future. For more information see this site: Hamdi Ulukaya. Vice versa: With purely performance-based remuneration B would get a whopping premium nothing and only A.
Moreover, what form the compensation is right or wrong, opinions in practice are often far apart. But it is undisputed that both approaches have some advantages and disadvantages for the company and the motivation of the employees. Seminar on Expert Wolf has created a solution target agreement and variable remuneration with the performance-oriented remuneration model, as are the advantages of both approaches used and leveled the disadvantages.