Tuesday, December 20, 2011

"Variable pay" woes

Most of our salaries are divided into two components - the first being the fixed and the second being variable. I came to this term when I moved back to India in 2006. In layman's terms, the variable pay is a bonus payable at the end of each quarter based on your performance and the organization's performance. To make matters more complicated, your performance and the organization's performance might be subdivided into other components. 

The variable pay, depending how the good quarter was, can touch 100%. If it is a bad quarter, forget about getting paid in full! When a bad quarter happens, it always results in a lot of angry people. The primary reason are the recruiters who sold you the deal. The recruiter, while closing the deal, will make you think you are getting the fixed and the variable as it is.

When the payout is less than 100%, people behave differently. I have had my young friends blowing their tops in front of me when the payout is less than 100%. In such cases, I do what I can. I listen to them. But how does the older friends react? The following is an excerpt from a conversation I overheard! They were working for the same boss.

Older Friend 1: I got only 67% of my variable pay.

Older Friend 2: I got around 76%.

Older Friend 1: *outrage* How is that possible?

Older Friend 2: *with a matter-of-fact and an irritating tone* Obviously, I qualified on more indicators than you. *after a pause* But do you know.... our boss got 85%.

Older Friend 1: *shocked* How?

Older Friend 2: He contained attrition.

Older Friend 1: *takes some time to figure this one out* What!!!!

Older Friend 2: *smiles*

Older Friend 1: So, people reporting to us were leaving right and left. But people reporting to him were not?

Older Friend 2: *smiles in a reassuring way to indicate Older Friend 1 is on the right track*

Older Friend 1: *haltingly* People reporting to him are us... that means you and me....

Older Friend 2: *smiling ear to ear now*

Older Friend 1: Well, if our variable payout is not less than his, he is going to have trouble with his attrition criteria in the next quarter. *ends with a evil laugh*



6 comments:

  1. He is right, no point in sticking to a place where only your presence makes someone earn more

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  2. @Pesto Sauce - :) Or the boss is so good that they are not leaving. Then, they need to emulate the boss by finding how he does it differently. ;)

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  3. I am just being introduced to variable pay, I thought it will be fixed

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  4. @Jagan - Better to check with your colleagues.

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  5. i am new to this chapter, does it exists in India ?? variable pay ?

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  6. @Deepak - Yes, it does in India too.

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