Variable remuneration: what is the relevance outside of sales teams?

Variable compensation systems have been around for a long time a key element in managing the performance of sales teams. With individual quantitative goals that are relatively easy to set up, they have established themselves as an almost universal practice. But what about employees in other functions? Less widespread and requiring more complex implementation, There is a real question about the relevance of a variable component for employees who are not directly related to turnover.

Nevertheless, it has been found that the issue of extending variable compensation programs to a wider range of employees regularly arises in entrepreneurial discussions. For some entrepreneurs, the association between variable remuneration, motivation and performance is self-evident, for others, it is much less obvious.

To see a bit more clearly on this delicate issue, We carried out an investigation by interviewing 126 Galleons in order to understand the criteria that condition the award or not of variable remuneration for non-commercial persons. Is this a common practice in leading French Tech start-ups? Does it depend on the size of the business? What key indicators are preferred to determine the amount?

A practice adopted by half of startups

Proof that the question is divisive, The Galleons are divided between those who have implemented variable remuneration beyond sales teams and those who are on a fixed salary. Symptomatically, the practice of the variable increases with the age and size of the startup.

So, the variable excluding sales only concerns 40% of start-ups with less than 50 employees, the proportion rises to two-thirds of Galleons managing startups with more than 300 employees. This is because the most common pattern is to start with a fixed salary policy, with the introduction of the variable once the company has reached a certain operational maturity.

However, once the variable is in place, it is difficult to return to a fixed wage policy, because this most often amounts to endorsing a large increase in the fixed salary to compensate for the loss of the variable. The addition of a variable component to the salary is therefore a very structuring decision, because it is most often largely irreversible.

Unnecessary complexity or a performance driver?

Complexity as a major obstacle to implementation

Let's start by analyzing reluctance to set up variables.

La complexity is cited in more than half of the cases as the decisive factor in resisting the temptation to implement variable remuneration, for multiple reasons:

1. Setting subjective goals : In many non-commercial positions, performance goals can be subjective and difficult to quantify.

2. Readability of performance criteria : Clearly defining performance criteria is a real challenge, potentially leading to confusion and frustration among employees.

3. Management of subjectivity : The evaluation of performance also depends on subjective factors, such as the quality of work, creativity or collaboration.

4. Administrative complexity : The management of variable compensation is administratively complex, especially when performance criteria need to be adjusted to adapt to the rapid evolution of the business. This requires significant management bandwidth to set and monitor these goals.

5. Adapting to changes : In a startup, non-commercial positions are subject to frequent changes in priorities and processes. Constantly adapting variable compensation goals to these changes creates additional friction that can hinder organizational agility.

So for 23% of the Galleons interviewed, we find the idea of a regular reassessment the base salary, in place of variables. Some admit not knowing which key performance indicators (KPIs) base the achievement of goals. Others believe that variables can distract teams and management. So The periods for setting and reviewing goals (typically at the end of the year), often become weeks of major stress for teams that divert organization from operational. ” I think it's de-focus for teams and management.” justifies an interviewed member.

In addition, there are concerns about the real impact of variables on the performance of non-sales teams It has thus been found that financial rewards only generate improved performance in the context of simple tasks, while they are counterproductive in complex situations requiring creativity and problem solving.

Highlighting a common objective as a main criterion

The promotion of a common objective is positioned as one of the key reasons favored by supporters of variable compensation. This mechanism should allow the CEO To align all employees while offering employees a sense of involvement and belonging, thus promoting a business dynamic and a team spirit. A member points out that the variable is based on “global and cross-cutting objectives in order to align everyone's challenges and to promote team spirit”.

Beyond this collective dynamic, variable remuneration is also supposed to be a powerful lever for individual motivation. It rewards personal performance, while requiring managers to define clear goals, thus establishing a results-oriented culture. Some also consider variable pay to be a negotiation tool in salary packages, and argue that it can improve employee retention.

This device is also seen as a means To align the interests of employees with those of the company And of reward the best performers. Some members even consider this choice to be A philosophical question, and assume the subjective dimension of the exercise. It is based on the assumption that money is a fundamental element of the intrinsic motivation of employees, This is disputed by the Galleons opposed to the variable.

In summary, variable compensation excluding sales is used either as a means of achieving the company's common goals, or as a driver of individual performance, and often a mix of the two.

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