Month: December 2017

Variable Remuneration Models

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.

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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.