Compensation: Base Pay and Variable Pay
Once the overall compensation strategy is established, the next step is to determine how that strategy will come to life within the organization. As we discussed earlier, total compensation can be divided into direct (cash) and indirect (non-cash) elements. In this section, we'll consider two critical elements of direct compensation: base pay and variable pay.
Base Pay
Base pay refers to the fixed rate of pay that an employee receives for performing his or her job. Base pay does not, however, include earnings obtained through shift differentials, benefits, overtime, incentive premiums, or any pay element other than the employee's fixed rate of pay.
A number of factors go into setting base pay rates, including ...
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