Variable pay plans are a type of pay for performance that put a small amount of base pay at risk.

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Variable pay plans are designed to incentivize employees with additional compensation if they meet certain performance targets or metrics. The amount of variable pay is typically a percentage of an employee's base salary, meaning that a portion of their pay is at risk if they do not meet the performance criteria. Therefore, variable pay plans do put a small amount of base pay at risk.

Variable Pay Plans Are a Type of Pay for Performance