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RAVI RAKESH
1

Dear seniors, I want to know about concept of variable pay in a manufacturing industry.
From India, undefined
PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Drsivaglobalhr
Doctor Siva Global Hr
Subbarao.v
Esi & Pf Consultant
Suman.sharma.genus
Corporate Hr
RAVI RAKESH
Compliances Of Labour Laws
+1 Other

sujith
2

Variable pay is monetary benefit linked to the Targets of each department. It can be based on the the targets of an individual, department or the whole organization. KPI's for individual, department or organization to be defined at the beginning of the year and actuals to be monitored throughout the year against the target. There can be a linkage for the variable pay based on the achievement of certain % against the targets.
From India, Bangalore
drsivaglobalhr
309

Dear Colleague,

Different companies use different terminologies like Variable Pay (VP), Performance Pay etc. Basically these Payments especially VP is operating on a logic that each year talents are fixed certain key performance indicators for their role/department and organization as a whole. On achievement of 100% of the said KPIs certain % of payment is shared to them from the profit. In case of 90% level there will be less payment and so on. The Variable pay is kept as a driving factor to achieve the targets 100% and there may be Financial KPIs, Cost KPIs, Market KPIs, Quality KPIs and all should result in Profits of the Organization. Generally there is a link with PBT of the company with Variable Pay. If the company is not achieving certain level of PBT then no Variable pay will be paid for that Financial Year. If targeted PBT is achieved 100%, then there will be a good variable pay % . If PBT is achieved 150% of targeted, then more variable pay like additional % of Variable pay is paid.

Variable pay in some companies is part of CTC at 15%-25% for Junior level and upto 40% level for Senior level employees. This is used as a retention tool also. Some companies double the VP and pays in the span of 2 Financial years if the employee is on rolls of the company on the date of disbursement of the VP. A good VP has to operate focusing KPIs, PBT and Retention together.

From India, Chennai
vibhakar
79

Ravi Rakesh,
Variable pay. The word variable is often used in Dearness Allowance. It varies with the consumer price index. More or less. Similarly any variable pay varies with something, either performance, saving, quality, timeliness, customer satisfaction, speed etc etc. It is studied introduction. Possibly all parameters are considered. It is mutual agreement between employer and employee. The total wage is broken in two parts, one is fixed - most of the times linked to attendance - and other is varied like incentive. That is to induce employee to work efficiently. It increases the profit and brand image of employer. But again this is a past concept. Now what is more practiced is depndence on machine and motivation. Time and motion study is of yesteryear.
Vibhakar Ramtirthkar, Pune.

From India, Pune
subbarao.v
38

Dear Sir
variable pay means variable dearness allowance . For all registered under the factory act, statistical department fixed consumer index points.Per point is so much paise/ rupee.
according to that variable wages are fixed every month by the Statistical department.
The Chamber of Commerce also can help regarding this.
V.Subbarao

From India, Madras
suman.sharma.genus
1

Variable Pay is a part of Employee's CTC which is taxable in nature
It may be calculated on monthly/Quarterly/Half-yearly/Annual basis as per company's policy

Variable Pay is generally calculated based on mutually discussed and agreed KRAs/KPIs.
These can be organizational KRAs or Individual's KRA or a mixture of both Company & Ind. KPIs

Variable pay is entitled to pay based on achievements of defined KRA/KPI
Company may define a baseline for each KPI below which an Individual is not entitled to get variable pay
Company may have the policy to disburse the variable pay more than 100% if target achievement is more than 100%

From India, Noida
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