According to a recent study on variable pay, conducted by Hays, more than 61% of French employees would consider changing jobs in order to obtain a more attractive remuneration! Why not imagine bonuses of support functions?
Today, variable pay compensation is no longer just for salespeople. It spreads gradually within the various functions of the company. From marketing to finance or human resources, more and more bonuses for support functions are emerging. What is it really? Can incentive compensation extend beyond the commercial function?
Here is an overview of the development of variable incentive compensation and an overview of its new followers!
VARIABLE PAY COMPENSATION: FOR COMMERCIAL ... AND "SUPPORT FUNCTIONS"
"Many companies need to capture experienced or even large-account profiles, but to bring them in, you have to offer attractive and motivating compensation. Yassine Bentayeb, Manager at Hays Sales & Marketing Consulting
The variable compensation is an integral part of the overall salary of a sales representative
In order to remain competitive with competitors and win new contracts, the sales function, from the Assistant to the Director, has been awarded variable pay compensation elements, which may, for some profiles, reach more than 40% of the total compensation!
France is sorely lacking in sales. Also, offering bonuses, commissions and bonuses in addition to a base salary allows companies to recruit more easily. This allows them to retain employees while motivating them further. According to Thierry Magin, managing partner at MCR Consultants, "In B to B, the variable usually weighs 20 to 25% of the overall salary». Thus, to retain and motivate salespeople to conquer new markets, the variable pay system proves to be very effective. For a long time dedicated only for salespeople, today productivity bonuses often based on objectives tend to be deployed within other departments of the company.
HR, FINANCE, MARKETING: MOTIVATING ITS EMPLOYEES THROUGH INCENTIVE COMPENSATION
"Historically, variable pay compensation mainly concerns sales teams. In recent years, it has tended to extend to all of the company's businesses. Thus the marketing function can be motivated by incentives on the results of a campaign. In finance, it will concern in particular employees in charge of recovery or credit managers. We can also grant productivity bonuses in logistics services " Hervé De Riberolles, Director of International Business at Primeum.
Performance indicators specific to each business
Depending on the functions and scope of each position, it is necessary to establish specific performance indicators. In fact, the criteria used in the calculation of the variable portion related to a particular business will, by definition, depend on the nature of the assignments performed. The extension of the bonus system to "support functions" does not escape the basic rules that guarantee the proper functioning of this mode of compensation. In addition, it is essential to set achievable goals and to provide employees with all necessary means to achieve them in the best conditions.
Measure the work quality provided through factual performance indicators
Basing an evaluation solely on quantitative criteria could be counterproductive. Indeed, the notion of quality of work provided is very important in certain sectors. The qualitative performance bonus must be able to reward everyone's commitment and involvement. Nevertheless, in order to evaluate this notion of quality, it is essential to have factual elements allowing the precise measurement of the efforts made by an employee.
The idea is therefore to set up quantitative evaluation criteria that truly reflect the level of quality produced in order to support employees towards performance, thanks to the qualitative elements measured. For example, it will be difficult to directly evaluate the quality of a recruiter's work without establishing objective criteria. The goal of the recruiter can be to generate 100 profiles per month which will result in 10 effective recruitments.
In order to truly reward performance, target bonuses must be awarded on the basis of indicators reflecting the quality of the work provided while being finely quantifiable. These quantitative and qualitative indicators will be specific to each function of the company.
HR, Marketing, Finance, IT: a tailor-made variable pay system
In the financial sector, variable incentive compensation is gaining more and more ground. Long time reserved exclusively for "top management", administrative and financial director, controlling director, etc ... these additional bonuses are now offered to financial profiles that do not necessarily have managerial functions. Thus, it is not uncommon today to see ads for middle management positions offering variable pay! "For about four years, we have noticed that incentive compensation is becoming an increasingly important part of companies' compensation policies for this category of employees," explains Mathieu Blaie, Chief Executive Officer of the Fed Finance.
A recent study by recruitment firms explains that depending on the degree of responsibility of the position held, specific criteria can be established to measure performance and assign consistent variable compensation. Thus, for CFO's profiles, cost optimization, team management and improved financing conditions are among the evaluation criteria that can be considered. This can represent a variable level of compensation between 15 and 30% of the overall fixed salary.
For controlling functions, auditors or credit managers, other criteria, such as the optimization of reporting deadlines or the reliability of the budget and the forecast can be put in place. The level of variable for these middle management functions can vary between 10 and 15% of the total package.
To another extent, Microsoft and Orange groups have begun thinking about redesigning their schemes. They want to focus on teamwork with collaborative behaviors, especially for project-mode employees. Variable pay compensation applies well to the various business lines of the company provided that consistent quantitative and qualitative indicators are established!
