Variable rewards are also known as what?

Variable rewards are best understood as incentives at risk based on performance because they are contingent upon the achievement of specific goals or performance metrics. Unlike fixed salaries or guaranteed bonuses, which are predetermined and stable regardless of the employee's performance, variable rewards fluctuate and are directly tied to how well an employee or organization performs. This pay structure is designed to motivate employees to enhance their performance, encouraging behaviors that align with organizational objectives.

Incentives at risk can include bonuses that are awarded for exceeding sales targets, production goals, or other measurable outcomes. This model of compensation plays a critical role in performance management as it aligns employees' efforts with company performance, thus driving engagement and productivity.