A Critical Perk in the Coming Age of Variable Pay

Research and expert opinion suggests (see here and here for more) that salary increase levels may not regain much momentum going forward and that the future of pay - or at least of pay for performance - lies with variable pay.  Incentives, in non-comp speak.

This trend has lots of implications for today's and tomorrow's employees. And a great discussion we had in a recent episode of Influence Insiders on the topic of incentives (about 52:00 in the playback for this specific conversation) led me to think about one particular implication of this shift.

We talked about the fact that this recession has brought us all new appreciation for the meaning of the term "variable pay" and the fact that it does - by definition - go down as well as up.  And while those in sales professions, more accustomed to the nature of variable pay, are familiar with the need to "live off their base" and save any incentive or commission earned for bigger investments or splurges, many of the rest of us are not so savvy.

And so if variable pay is going to play a bigger role in everyone's compensation packages going forward, then that new reality may also bring a need for increased support and assistance in budgeting and financial planning.  According to SHRM's 2009 Benefit Survey, 28% of employers currently offer some type of financial planning service to their employees.  Going forward, it would make sense for more employers to jump on this particular bandwagon - and for them to ensure that this service is tailored to address the new variable income reality that many employees may face.

That would be a trend that makes sense to me.

Ann Bares is the Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time.  Follow her on Twitter at @annbares.

Comments

[working girl]

An excellent perk. And non-taxable! 'Don't earn more, spend smarter.'

[Ann Bares]

WG:

Thanks - makes sense to me!