The fixed pay or variable ways are the two methods by which the payments to the employees are given. Out of the two modes we will discuss today which is better. You can understand it by reading this blog.
Fixed pay is given to employees once every month and variable pay depends on the performance. You can check out the features of fixed pay or variable pay in next sections.
Let us share the insights upon fixed pay and variable pay. The best explanation will help you in deciding that which is better for you.
Fixed pay and its features
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The features of fixed pay are shared here and you can learn about them. The features are written below-
- This amount is given to employees in a month. A particular date is set and then the payment is transferred.
- In this form of pay the amount is given irrespective of the performance of the employee.
- If the employee has broken the rules and regulations of the company then the amount may be affected by it.
- It is good as employees have a fixed amount of earnings at the end of every month and it makes it easy for them to manage their expenses.
- It provides security to the employees.
- In this mode the employees who put more effort are hard to notice and then it impacts their efforts.
The fixed pay method helps employees to plan their expenses in the required amount of money. It is a very traditional method of paying employees.
The features of variable pay
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Features of variable pay are also to be known. You can check out the features that are mentioned here. Know about them by checking them below.
- In this the employees are paid according to the performance.
- Targets are given to employees and they have to meet them. It’s important for the employees to meet the targets.
- In this mode the employees are motivated and it leads to better performance.
- This can impact the environment of the work. In this everyone may try to compete with each other. Friendly work environment is not maintained.
- Employees in this company don’t have any security. If the company is getting impacted in terms of losses then it directly impacts the employee too.
The unpredictable nature of variable pay impacts the employee and their income. In this the main emphasis is given to the performance.
Merits and demerits of fixed pay
Fixed pay comes with merits and demerits. The merits and demerits of fixed pay are shared here and you can check it out.
- One can get compensation if the work done is good.
- A secure payment is obtained in fixed pay.
- A good work environment is achieved.
- One can manage the expenses in a specific amount of money.
Demerits of fixed pay.
- It’s difficult to figure out who is putting in more effort than others.
- Inflation is impacted due to this.
- If performance bonuses are not considered then it can impact the employee.
After checking the merits and demerits of this you can know whether it’s good for you or not!
Merits and demerits of variable pay
Variable pay is also known for its merits and demerits. You can check out the merits and demerits by reading the points.
Merits of variable pay.
- If the performance of the employee is good then it can be very beneficial for the employee as it leads to a good increase in pay.
- The best performer is easily identified and it’s appreciated for hard work too.
- The employees remain motivated.
Demerits of variable pay that you need to know.
- In this a very unfriendly work environment is created as everyone tries to compete with each other.
- If the company goes through loss then the employees are affected.
- It is not a secure mode as the amount varies.
These are the merits and demerits of variable pay. It gives some advantages and some disadvantages to the employee.
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Which pay is best for employees?
Variable pay and fixed pay both have their own merits and demerits. One needs to choose one according to one’s own interests. If you are someone who wants to be appreciated according to performance and are not bothered by variability then variable pay is the best option for you.
Moreover if you like to have a fixed amount of pay and you want the same amount every month then fixed pay is good. It helps give security to the employee. Decide the one that suits you and then proceed with your work.
Role of pay in the performance of employees
Be it fixed pay or variable pay, both play an important role in the performance of employees. Employees and their performance can be enhanced with help of the incentives given. If they are awarded with help of good pay then they might perform better as it will motivate them.
Companies that reward their employees are considered more productive than the others where the awards are not given. It’s best to work on all these areas so that better results can be obtained. If the employees are happy then it will definitely give good results. Fixed pay or variable pay can be decided accordingly. After considering the merits or demerits of the fixed or variable pay one can decide which one is better. Choose the one that is good for all of your needs.
Conclusion
Fixed pay is the amount of money that is given at the end of a month to the employee. Variable pay is the performance based amount that is offered to employees. These both have different merits and demerits. One can know everything about fixed pay or variable pay in this blog. Features, merits and demerits all are included in this blog. Read this blog and then know which method of payment is more beneficial for you. You will get all the insights by reading this blog. Explore the best option and then carry on with the right one.
