Considering a Variable Pay Structure in IT: Is It Really Beneficial for Employees?

Hi, if anyone could tell me the benefits of a variable pay structure? I am in an IT company. We wish to switch to a variable pay structure, i.e., 60% of the salary would consist of fixed components, and 40% would be performance variable. The effect of appraisals would be based on the 40%. Please let me know whether this variable pay structure would be good for employees.

Thank you.

Hi, Himadri, we already have a policy of deducting some amount from the salary for retaining employees. As you are saying that you show a variable part apart from the gross salary, would the total CTC increase in this case? For example, if an employee's monthly salary is 10,000/-, then his CTC would be 1,20,000/-. So, do we have to show 1,20,000 + variable part in the offer letter? Is that the case?

Regards, Nikita