We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Variable Remuneration?

By Osmand Vitez
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Remuneration represents the payment or compensation given to an individual for general employment or services rendered. Variable remuneration is a payment method that changes with any given activity. All companies use some form of variable pay in order to reward employees for a job or completed activity. In some cases, companies may provide variable remuneration in addition to fixed salaries, including bonuses. This remuneration type can have a broad definition when taken as part of the company’s total compensation package for different employee types.

An hourly wage is the most common type of variable remuneration given to employees. For each hour worked, a company gives the employee a standard wage. The amount paid hourly to each employee varies based on an employee’s knowledge, skills, and abilities. The market rate for certain employment types can also affect hourly pay. Overtime can also be part of the variable remuneration, as employees who work over a certain amount of hours each week will receive higher hourly wages.

Management positions commonly have fixed salaries for the jobs offered by the company. As an added incentive, salaried positions — both management and otherwise — may receive a portion of variable remuneration. For example, a sales position may offer a small salary to each worker in this department. The remuneration package will include an additional payment for each item sold by the individual. The variable pay package allows a worker to increase his or her pay depending on the work and effort put into a job.

Bonuses or one-time compensation rewards can also be part of a variable remuneration package. The bonus or compensation reward may depend on performance for a given time period. Individuals can earn a range of extra compensation depending on their actions and abilities to meet goals. Failure to meet the goal simply means lower remuneration, hence the variable nature of this pay plan. In many cases, the bonus or compensation reward pays out quarterly or annually for the employee.

The purpose of offering variable remuneration is twofold. First, companies can lower their initial costs for hiring employees. Lower fixed salaries result in lower overall costs each month for the business. Second, employees often work harder to achieve pay goals, which benefits both the company and the employee. The most essential part of this remuneration package is to create competitive pay; failure to do so can create a scenario where individuals are not willing to work hard for low potential salary increases.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Discussion Comments

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.