What is strategic compensation?

Strategic compensation often includes competitive compensation, which often includes:

• High salaries for employees

• Comprehensive employee benefits (Insurance and retirement plans, etc.)

• Forms of variable compensation

Variable compensation is a form of payment from employers to employees that is based on employee performance. Normally, variable compensation is paid in addition to base compensation, like an annual or hourly wage.

Variable compensation is often included in strategic compensation packages. Employers use it to incentivize their employees to perform better or at a higher output level. If a sales team can reach or exceed a sales goal, they might receive variable compensation through bonuses.

Variable compensation can come in several forms, including:

• Bonuses

• Commissions

• Incentives

• Stock options

• Profit-sharing plans

Within some of these areas, there are other variable compensation subsets.

For bonuses:

• Retention bonus

• Project-based bonus

• Referral bonus

• Sign-on bonus

For incentives:

• Management programs

• Profit-sharing programs

• Gainsharing programs

• Sales incentive programs

• Cash-based programs

• Equity-based programs