Variable remuneration: what it is and how to apply it in your company

According to CLT, every employee should have a fixed salary. However, there is room for incentive programs and rewards that complement this amount, as an extra. It is exactly this "extra" that we call variable remuneration. 

This remuneration may be linked to several aspects, such as the position held by the employee or even the results obtained in a certain period in accordance with performance indicators. 

Throughout this article you will learn more about subject and understand:

• what is variable remuneration;
• how to apply in the company;
• advantages for those who opt for the model. 

Check it out below!

What is variable remuneration?

Variable remuneration is a reward programme that the company offers to an employee. This programme must necessarily complement a person's fixed salary and is often directly related to the results that have been brought in for the company within a given period. 

It can also be applied to employees who are at a certain level in the job hierarchy. For example: a director receives more in variable remuneration than a coordinator, who receives more than an analyst. 

It works like a rewards policy. But the rules of the game need to be pre-established for the company and must be clear to everyone. It is necessary to ensure that the legal conditions for the implementation of variable remuneration are being met by the organisation that will offer them to its employees. 

How to apply in the company?

The first step in implementing variable remuneration in the company is to define which indicators define that certain employee can receive this extra in their salary. 

The programme is described in the CLT, so it is necessary to study what the criteria and rules are so that the practice can be applied. After that, you just need to follow up the KPIs that were defined, map the progress and make sure that employees are seeking to achieve these goals. 

There are a few different types of variable remuneration. The best known is commission, often used by commercial areas of companies. But there are also other types: bonuses, incentive campaigns and competency-based pay. 

What are the advantages of variable remuneration?

There are numerous advantages gained by those who choose to implement the programme. See:

• increased motivation of employees;
• strengthening of the company's culture, mission, vision and values;
• decrease in turnover;
• increased employee engagement. 

As you have seen, the benefits are directly linked to the Human Resources sector of a company. Therefore, it is essential that it works in partnership with Finance to show the advantages that implementing the programme can bring. 

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