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Recruit top talent with incentive compensation!

Recruit top talent with incentive compensation!
February 18, 2021


“Many start-ups need to attract experienced applicants, even from key accounts, but to bring them in, they need to offer attractive salaries” – Yassine Bentayeb, manager at the consulting firm Hays Sales & Marketing – article on

While 87% of managers think introducing a variable pay policy is useful, if not indispensable according to the latest variable pay barometer, still too few recruiters think of putting it forward to attract job applicants. Variable pay, like corporate culture or the scope of the position, can be a real leverage for recruitment.

So, how do you recruit with variable pay? Here are a few ideas in this article!

How do attract job applicants through variable pay?

“Today, variable pay is no longer the exclusive preserve of salespeople. It is gradually spreading throughout the various functions of companies. From marketing to finance and human resources, more and more bonuses are being offered for support functions” – Fabien Lucron, development director at Primeum.

Demystifying variable pay to attract applicants

There are various tools for attracting good candidates, among them variable pay, which is still largely under-used by companies and recruiters. While the question of the remuneration system can be raised as early as the phone interview, most HR professionals or recruiters find it difficult to clearly grasp the different aspects of variable pay and it is not surprising that they struggle to highlight it in the recruitment process.

However, being able to present a variable pay scheme is a real recruitment challenge, as a recent DigitalRecruiters article explains “In the context of a talent war, proposing an attractive pay policy and mastering how it works can be decisive when choosing whether a candidate joins a company or not”.

Incentive compensation attracts candidates motivated by performance

For support functions, as for sales functions, there are two different types of job candidates: those motivated by the level of incentive compensation and earning potential, and those who are not. Today, companies have every interest in attracting applicants that develop a certain performance culture. Attracting high-quality candidates therefore involves offering the possibility of increasing their pay through variable elements directly linked to their individual performance. Conversely, offering only fixed remuneration – even if it is high – will not encourage employees to achieve strong performance. There would be no recognition or financial reward for this due to the lack of an existing system.


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Making a clear distinction between variable and fixed remuneration at the interview stage

During the job interview, the variable part of the remuneration package must be openly discussed. It is a significant recruitment tool that will eventually convince applicants who want a financial reward for their performance. To be effective, the variable component should not be taken for granted, otherwise the task of motivating teams might not be fulfilled. The presentation of the incentive compensation system must therefore be clear and the targets associated with the position as detailed as possible to the employee. The use of variable compensation should not encourage the recruiter to “oversell” the system by guaranteeing a maximum level of profit. The recruiter may give as an example the average variable compensation received by a team, specifying the level of seniority of the candidates so as not to cause disappointment later on.

After recruitment, variable pay plays a role in motivating and retaining applicants

“In the context of recruitment, you need to have previously outlined the incentive compensation proposed for each type of position. In addition, you have to clearly establish the nature of the targets to be achieved and the exact methods of evaluating and weighting them” – extract of an article from DigitalRecruiters.

Offering variable pay boosts performance

A system of incentive compensation helps meet the need for performance recognition expressed by employees. More and more applicants with both sales and support functions feel that their performance should be taken into account in their remuneration. According to DigitalRecruiters, “it would be wrong to believe that incentive compensation only applies to job applicants in sales. Today, many support functions offer salaries with a fixed component, known as basic salary, supplemented by variable elements that can take different forms such as commission or bonuses”.

Set targets shape work

In an increasingly uncertain professional environment, it is essential to set a clear direction for employees. Setting objectives is like a compass for performance: everyone has a clear vision of the expected targets, the overall objective to be reached, the means at their disposal to achieve it and the associated financial gains. Sales and support teams are thus guided in their work by the desire to achieve their targets in line with the company’s overall strategy. They are able to prioritise their tasks according to expectations and concentrate their efforts on seeking remunerative performance, as part of a virtuous circle of motivation.


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Introducing an incentive compensation system avoids arbitrary bonuses

In the absence of an incentive compensation system, other practices are developing in the area of remuneration, in particular that linked to the arbitrary allocation of bonuses and financial benefits. As part of this practice, a company pays bonuses to employees without knowing whether they are the most deserving and without basing them on objective achievements. Indeed, only an incentive compensation system makes it possible to formalise precise calculation rules that ensure there is a correlation between the variable paid and the observed performance. The absence of a variable pay system also exacerbates feelings of injustice: how can the payment of bonuses be justified without objective rules? In this context, the variable cannot play its role as a motivational tool, so does not affect performance. Finally, unjustified bonus payments undermine trust towards management, as employees question the integrity and credibility of managers offering bonuses without any basis.

Clear and effective communication

The remuneration system must be transparent and truly differentiate between employees; the company must be able to reward top performers. As such, the envelope dedicated to incentive compensation must be adapted to the performance challenges and sufficient to remunerate deserving employees.

Explaining the process of setting objectives

To avoid creating disappointment for the candidate, it is important to be transparent about the rules for applying incentive compensation.

Furthermore, once the employee has been recruited, the dialogue on the issues surrounding variable pay must continue. Indeed variable pay cannot be implemented without the employee’s support, as the employee is the first to be affected by the set objectives. The employee must be able to express their opinion and feelings concerning the achievement of objectives and the associated performance and compensation, particularly during the appraisal interview.

According to a recent study by recruitment firm Robert Half, 40% of managers choose their jobs according to remuneration, so offering an attractive incentive compensation system, and above all knowing how to make the most of it, is essential to attract top talent!


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The 10 golden rules of incentive compensation

Find out the incentive compensation white paper gathering best practices and pitfalls to avoid to set up incentive compensation plans

Blog post author

Hervé de Riberolles

For more than ten years, I have been leading a number of projects for our customers to diagnose and re design the incentive compensation systems of their teams. The diversity of environments (sectors, countries, populations) that we face, my team and myself, requires a perpetual adaptation of our methods and our offer. The motivation of employees is, from my point of view, exciting, constantly evolving and at the crossroads of several areas of expertise. That's what makes it so interesting.

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