On the other hand, to implement the variable pay plan has some obstacles as well. The most mentioned problem in published literature I have reviewed is the lack of a sound performance measure of variable pay plan. Besides, the cost of the variable pay system is also a critical issue. Thomas (2003) proposed that the variable pay plan can transfer more compensation cost from fixed to variable which means that the company can have more control over the cost...
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Thomas (2003) proposed that the variable pay plan can transfer more compensation cost from fixed to variable which means that the company can have more control over the cost. He also mentioned that it is better for the company to emphasize employees' performance rather than reducing cost. Therefore, how the company can balance motivating employees and controlling the cost of variable pay plan is an issue too...
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