In this article we will address different aspects to consider in the articulation of a document that allows companies to implement a variable compensation system, whose main purpose is to motivate people to strive to do their job better.

If you are considering implementing a Variable Compensation System (hereinafter, VCS) in your company, whose main objectives are cost flexibility, communication of priorities, and motivation to achieve specific results, trying to stimulate your employees through a series of incentives to achieve certain outcomes, you should bear in mind that the establishment of said VCS should be simple, easily understandable, with clear and memorable variables, because it is more motivating than if it is complex, since it makes it easier for employees to really know what is expected of them so that they can direct their actions towards the common goal.

The document that formalizes and regulates the SRV may contain the following parts:

• Implementation: A brief explanation is given regarding the motivation that leads the company to establish an SRV.
• Definition of objectives: The description of the fulfillment of the objectives established by the company for the granting of the bonus and/or incentive is established, which may vary depending on the circumstances of each period of time, therefore it is advisable to indicate the variable nature and expressly refer the definition and quantification criteria to an annual communication of objectives that may be formulated by the Management of the Company at the beginning of each fiscal year.
• Other Conditions: In addition to achieving the objectives as defined above, compliance with conditions such as the provision of services throughout the annual reference period, or the accrual of the amount proportional to the time worked during the same, or others that may be considered appropriate, is regulated.
• Amount and accrual: The method of remuneration for the incentive system implemented in the company is specified, which will be linked to the degree of achievement of the objectives set out in the annual objectives report. The method of payment of the accrued amount is also specified.
• Discretionary nature: Finally, it is indicated here that it is not consolidated and is subject to the discretionary power of the company's management, both in its granting and in its amount, reserving the power to reduce the base amount of the variable remuneration and even eliminate it.

Conclusion

In a Variable Compensation System, there are numerous elements that must be regulated in order to make the system as motivating as possible for the employees of your company. Therefore, this system must be managed at the particular level of each company, establishing a design specifically adapted to the needs of each company and the incentive of results.

Therefore, at Àmbit we wanted to give you a brief overview of what the document outlining this regulation should look like, and we invite you to contact us if you are interested in implementing this system in your company, so we can study each case individually.

• About
• Latest entries

Sonia Rodríguez Bueno

Labor consultant at Àmbit Assessor

A graduate in Labor Relations from the University of Barcelona, ​​she furthered her training in this field with several specialized courses as a labor relations technician and occupational risk prevention specialist.
She began her professional career at Valeo SL as an administrative assistant. However, she has dedicated her entire career to the world of business consulting.
In 2001, she joined Àmbit Assessor as a labor consultant.

Latest posts by Sonia Rodríguez Bueno (see all)

• Employee leave of absence: What is it and when can it be taken? - October 26, 2017
• Unfair competition and full-time dedication to work by the employee. - July 9, 2017
• Implementing a variable compensation system for employees to increase their motivation. - May 7, 2017