https://www.cheggindia.com/career-guidance/what-is-variable-pay-in-ctc/
"When you join any organization, you wish that they appreciate your efforts. Isn’t it? Especially when you are performing really well, you expect the company to offer a bonus. In that case, most companies provide variable pay. Now, you may want to know what is variable pay in CTC.
As per a survey conducted by salary.com, about 77% of organizations are offering variable pay in the form of incentives or bonuses to their employees. Many companies are adopting this policy as a token of appreciation.
However, there is a stark difference between variable pay and fixed pay. It just depends on your earning potential and performance within the organization. Every person must carefully analyze and understand the difference between the two. This plays an important role in ensuring better salary negotiation.
The fixed salary that you get is the base salary. A variable salary is an extra amount that you receive. The extra amount that you receive completely depends on your performance. It is important to weigh the options carefully during the salary discussion. In the starting stage, you must discuss the fixed and variable pay of the salary structure.
What Is Variable Pay in CTC?
You might as well consider variable pay to be performance-based pay. Variable pay in CTC is the extra amount that you receive as a bonus. While the CTC reflects a fixed amount of variable pay, the amount that you receive will vary. It depends on your performance. Two factors determine the incentive pay:
1. The company’s performance
2. Your performance
Therefore, variable pay means that the scheme can be changed by the company. The company may set targets and provide commission-based pay on the combination. Variable pay is one of the most important constituents of total rewards. It will be for everything that the company offers. The variable pay in CTC might as well be an important percentage of fixed pay.
The employers provide variable pay to employees based on their performance. It also depends on the success of teams, and personal and company performance. The communication of variable pay to employees is done in the initial stages itself. It can also be presented as incentive pay or commission-based pay. Some companies compensate employees with variable pay as paid time off. Some may also offer it as stock or cash.
The variable pay depends on company performance. In case the company faces any loss, it will not receive any variable pay. For this reason, the company’s set target achievement and base payout. Different factors will influence it like project completion and team performance.
If the company meets its goal, the employers will get information about the same. Many companies also turn to giving gifts to employees. The combination of variable pay and basic salary is known as a pay mix. "