What Is The Difference Between Variable-pay And Skill-based Pay Programs?

Variable-pay involves paying the employees a form of compensation for performance in addition to the fixed base salary paid. It is a technique opted for by companies to increase the productivity of their staff. It is seen used on a large scale in the Information Technology sector. Skill based pay on the other hand refers to pay that is paid to employees who are willing to undergo a learning or training program to increase the level of their skills. It is pay that reflects the organisations appreciation of the employee acquiring additional skills and training. Both of these are progressive models of remuneration that are adapted to increase productivity by organisations, but that target distinct areas of an employees character. Both seek to motivate an employee through monetary incentives to perform better.