Variable Salaries: Aligning, Boosting and Rewarding actual outcome

The main trade-off regarding wages is the split between fixed and variable salaries. The rule of thumb is to give 20% of the fixed salary in variable. In the US it is on average 50–60% and can go up to 100% in certain companies.

A good variable policy is a management lever to (1) link individual contributions to the overall strategy of the company, (2) catalyse everyone’s outcome (by increasing motivation), (3) fill the gap between market practices and the actual outcome.