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Well said. Base pay is like a retainer and if it's too low people shop around. And if it's not too low, variable pay reminds people not to take their base pay for granted. Variable pay also provides a sense of risk, which can be highly motivating. The two combined can drive great results.

Base pay is the cost of having the rights to leverage the talent - consider it a licensing fee.

Pay for Performance - that's the cost of applying the talent in a specific way toward a specific goal.

Excellent post, Doug. This really concisely sums up many of the arguments raging about pay. Well done.

Amazing summary. Right on point!

Thnk you for your comments everyone!

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