Variable Pay / Performance Based Pay

Non-Sales Incentive Plans

Organizations call compensation programs for non-sales roles by many different names:  variable pay, pay for performance, incentive compensation, piece rate pay, performance pay, component pay, variable compensation, etc.  As organizations LOVE acronyms, these often get abbreviated to: VC, P4P, PFP, IC, PRP, etc. 

Consider what the plan is trying to DO and choose more generic terms rather than seeking out information based on your company's unique names or abbreviations. 

PRIORITIZING ROLES 

While some companies believe strongly that EVERY role in an organization should have some pay at risk, there is a prioritization strategy for determining which roles are more suited to variable pay than others.  If you group your roles along the two dimensions of individual accountability (measurability) and impact on profitability, you will get an idea on where to focus your design effort for variable pay: 

Using a trucking company as an example, we could group the roles as follows: 

Note: each company will be different, and their roles may have more or less impact on profitability or more or less individual measurability. 

A NOTE ON EXECUTIVE COMPENSATION 

Executive compensation for publicly traded companies (and large private companies) requires specialized training and knowledge. There are many firms with talented consultants who have spent their entire careers in this area. Prosperio can help with executive pay for smaller companies (cash only, not equity), but for larger organizations we recommend contacting Pay Governance and asking for John Sinkular or Brian Scheiring.

Common Project Types