Variable pay strategy and program for an online retailer - Research Paper Example

Variable pay can at times be long termed (more than a year) while at times it can be short termed (less than a year). Incentives refer to pre determined standards or criteria used in award determination. Bonuses on the other hand are wards delivered to the people concerned at the end of a certain period. The period on the case of bonuses is determined by the subject judgment of the quality of the performance while a reward is warranted (Variable Pay and Performance Linked Incentives, 2010). Strategy An effective variable pay program is as result of a strategic variable pay strategy, this strategy acts as a guideline for a quality design and program administration.

A strategic program has the following characteristics: the clearly fit in the organizational structure and are steers of the organizations success. For a strategy to contribute to the success any organization, it must be in line with the mission and vision of the organization concerned. The speed of a strategy does not bring about and importance because most likely it may be speeding to the wrong direction. A quality and strategic program should target to meet the objectives of the organization by lying down the require plans which if properly and rightfully administered, it would take the firm to another level.

The strategy of the program should be also sound enough to bring about sustainability of the firm putting in consideration all the core strengths of the organization. It is also critical for a strategy to be in a specific context. It must bring out feasibility where it suits with the culture of the organization and that of the human resource, this must consider the organizational environment and realities that exists. Integration must also prevail where the structure of the program suits in the structure of the specific organization including the human resource’s structure.

The program must also be flexible enough to respond to appropriateness and changes within an organization (Variable Pay Plan Development, 2011). There are differences between other compensations and variable pay, this differences occur on the bases of benefits and base pay. Variable pay program does not fit in entitlement cultures, this is because it’s not career annuity where base pay increase and must be compensated trough earnings over the given period. In reference to financial perspective, variable pay is a variable cost but the benefits and base pay are naturally fixed.

There are difficulties in administering variable pay, competitive measurements is on of these difficulties. Levels of variable pay vary dramatically unlike levels of base pays, this helps in transforming average of the prevailing market into a broad-range, other than a specific point. One of the major characteristic of these variable pays is that it can be combined with other components to evaluate the performance of different levels in the organization both long term and long term (Variable Pay and Performance Linked Incentives, 2010).

The most significant benefits associated with variable pay compared to other types of compensations it that cost related to planning can be combined with performance/revenues and therefore vary economically. In Alaska, there is an advantage of using this kind of system because when the world’s economy is open to large variation, it carries with itself competitive advantage because the situation disadvantages them