High Differentiation of variable pay vis-a-vis performance
It is important to have a broad range in the variable pay component at all levels. It provides the earning potential as an immediate opportunity which drives the employee to meet or exceed his/her short term goals. It also creates a criteria for distinction based on performance.
This implies that the range of variable component itself should be broad so as to allow plenty of room for explicit differentiation between employees whose performance is high and those who do moderately and the under-performers. HR can provide a large range of the variable component which yields enough ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬Ãƒâ€¦Ã¢â‚¬Å“trackÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬Ãƒâ€šÃ‚Â to run in. Aided by effective execution of the Rewards and Recognition system, a broader range of incentives can set up role model employees which can serve as pillars of motivation to others. It also sends out a clear message to the employee community that the high performers are clearly recognized and suitably rewarded. This truly materializes the phrase ÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬Ãƒâ€¦Ã¢â‚¬Å“Pay for PerformanceÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬Ãƒâ€šÃ‚Â. In fact, this large range of variable pay can serve as a forerunner to the learning and development initiation exercise.