Discuss why variable pay-for-performance plans have become popular

Discuss why variable pay-for-performance plans have become popular and what elements are needed to make them successful.

Variable pay-for-performance is a motivation technique that primarily uses fiscal incentives to motivate the employees to work harder. Pay for performance environments are not always successful, as sometimes team members will begin to compete with other employees instead of solely with themselves. This is why in order for a pay for performance structure to work, the institution needs to have clear guidelines set in place, clear goals and metrics, and, in my opinion, should focus on customer service scores, and not sales. This would ensure that my employees are still thinking first about our clients, and not their own numbers or metrics that will impact their pay. I think a down side to this methodology is that it can also create stress for the employees who do not know what they will make any given pay period.